Superannuation
Basics (Pension)
Superannuation is
the process of accumulating a fund for retirement. Although the
Australian state does provide an Age Pension, most people expect a
higher income in retirement. The Government has introduced tax
incentives and employment laws to encourage contributions to
super.
Superannuation is a
complex issue and we can only cover the basics on this site.
However, we have listed some key points that migrants may want to
consider and provided links to other sites you can visit for more
detail.
The Superannuation
Guarantee
By law, employers
must pay into a superannuation fund for their employees (there are
some exceptions, eg. if salary is very low).
The guarantee rate
is 9% for the current financial year.
When considering a
job offer, check if the Super Guarantee is on top of the figure
you're being offered, or included in it - it makes a big
difference!
Self-employed people
can also pay into a Super fund and gain the tax benefits.
Funds can be run by
the employer (private company or state industry), run by a private
fund manager or self-managed by the individual.
Tax Incentives
Contributions to
complying superannuation funds are taxed at 15%, which represents
a considerable saving for someone on higher tax rates (42% or
47%). Earnings within the fund are also taxed at 15%.
Additional
Contributions
There are various
ways to top up your Super fund, such as Salary Sacrifice (before
tax), additional contributions (after tax), co-contributions. What
you can do, how much you can contribute and how tax-effective it
is will depend on your employment status and salary.
Access to Benefits
The "Preserved
Benefits" of your fund can only be accessed when you reach
the "preservation age" - between 55 and 60, depending on
when you were born.
Choice of Fund
Legislation
introduced in July 2005 enables most employees to choose which
fund their Super Guarantee is paid into - see www.superchoice.gov.au
for more.
More Information
For more information
on the above points, visit the Superannuation
Entry Point on the ATO website
Transferring UK
Pension to Australia
Who
do I transfer my UK pension to in Australia?
You have to transfer your UK pension to a complying Australian
Superannuation Fund licensed to receive your funds by ASIC.
Is
there a time limit for me to transfer my UK pension to an
Australian complying superannuation fund?
Yes, once you become a resident of Australia for Australian
taxation purposes you have 6 months to transfer your funds to
minimise any Australian taxation on transfer.
When
should I start the process of transferring my UK pension to
Australia?
Due to the possible time delays in UK and Australian taxation
offices and fund transfers we recommend that you begin the process
of transferring your UK pension immediately upon your arrival in
Australia.
What
happens if I don’t transfer my UK pension within 6 months of my
residency in Australia?
If you do not transfer your UK Pension within 6 months, then the
increase in value of your UK Pension will be subject to an
Australian tax of 15%.
Do I have to transfer
my UK pension to Australia?
No, you can leave it in the UK but there are detrimental taxation
consequences when you eventually retire or bring those funds into
Australia either as a regular pension payment or as a lump sum.
Are
there any fees involved?
Yes, fees will be payable to the complying Australian
superannuation fund
If
I decide to transfer my UK pension to Australia what do I have to
do before I leave the UK?
You must obtain an up to date statement from your UK Pension
manager. If you have an employer sponsored UK pension please make
sure your UK Pension manager is in possession of your termination
date of employment. You also need to notify your UK Pension
Manager in writing of your intentions to migrate to Australia and
give them a forwarding address in Australia.
Can
I add to my UK pension once its is transferred to an Australian
complying superannuation fund?
Yes. There are several ways that this can be achieved:
-
Employment –
in Australia if you are an employee and earn over $450 per
month your employer is required by law to put 9% of your gross
salary into your complying Superannution Fund.
-
Self Employed
– Self employed people can contribute any amount to their
own complying superannuation fund but there may be
restrictions on the tax deductible amount of your
contributions.
-
Self Funding -
whether employed or self employed you can contribute to your
complying superannuation fund at any time in addition.
Your taxation
position with respect to any of the above contribution methods
needs to be explained to you in detail when you are in Australia.
Useful Links:
Superannuation
Entry Point on the ATO
website.
www.superchoice.gov.au.
www.asic.gov.au
- Australian Securities and Investments Commission (the consumer
protection regulator for Australian financial services).
Guide
to Super at FIDO - Consumer Guides published by ASIC.
National
Information Centre on Retirement Investments.
These external links
will open in a new window.
The State Pension
(for those with no superannuation scheme)
How much is it?
Very roughly, the
state pays a pension of up to about $200 per week for a single
person or about $350 per week for a couple. But there is an asset
test and an income test which may reduce the pension.
More Information
For more information
on the Age Pension, visit the Centrelink
website.
