Superannuation Explained | Superannuation Australia 2020 - YouTube

so back in the 80s when Australians were

rocking double denim, eating chicko rolls and watching Ferris Bueller's Day

Off the Australian government was having a small freakout.

Why?

Because the population was exploding

the baby boomer generation was about thirty years of age

and the government was thinking "hey, when these guys turn 65 or 70

who was going to pay their pensions and can we even afford it?"

they needed a new system and what they came up with was what we're using now - Superannuation

so in this video I'm going to go over the basics of superannuation

but it is just video one in our superannuation series

so have a look at the link below or the playlist on our youtube channel

we have other videos including a 'How to read your super statement',

'How to find your lost super',

'Insurance inside super' or 'Your investment choices inside super'

'How to buy property inside your superannuation' so be sure to check out those other videos

but let's get into this video now

Just before I begin, a quick warning to say this is not personal advice this is general

advice only

okay as I was saying the Australian government had a bit of a problem

who was going to pay for everyone's pensions as the population continued to grow

and the solution they come up with goes a little something like this

they said the Australian people the general population will save money to pay for their

own retirement

but in return will be rewarded with a really great tax zone for that money

and that's pretty much it the Australian superannuation concept

it's about Australians saving for their own retirement inside a really great tax zone

here is money that's being treated really well you're not gonna have to pay that much

tax on it

you just can't touch it until you get to retirement age now that might sound like you have an

option unfortunately if you're an employee you don't

so in 1992 the government introduced what's called the super guarantee

and effectively move the responsibility of saving this money

taking it away from the individual and giving it to the employer

so right now the super guarantee percentage is 9.5%

so your employer is responsible for putting away 9.5% of your wage every single year

so if you're on a hundred thousand dollars it's nine thousand five hundred

and that's a really good point

so when you're looking at things like you're super statement or seeing how much you are

getting paid by your employer

for your super it should be roughly ten percent, nine point five at the moment

and in the current coming in years that will be increased

okay so your employer is paying your nine point five percent into your superannuation

so what's the other half?

what's this great tax zone that I've been talking about?

well I did do another video called the zero percent tax zone so check that out for more

details

but the basics go a little something like this

as an individual you can pay up to 46% tax on your income as you're earning it into your

own personal name

however when you put it into superannuation you only pay 15% while you're working

and then when you retire it turns into a zero percent tax zone effectively

so all the money that you make throughout your life goes into a pension account and

you effectively don't pay tax on it

so 0% tax, that is pretty good

if you're young, a 0% tax zone in super and not be able to touch it until you're 65 may

not sound that appealing

at some stage in your life you will be very interested in putting extra money into superannuation

so how do you do that?

it's called a super contribution and there are two different types

you can add money in pre-tax so I much like the way that your employer puts money in and

this is called a concessional contribution

and right now we have a limit of $25,000 per person per year

or you can put money in from your pocket

let's say you sold a property and you're trying to get money into that better tax zone

this is after tax and it's called a concessional contribution & the current limit is $100,000

per person per year

there are some extra rules and some really great strategies for minimizing tax when it

comes to superannuation contributions

so if you are thinking about putting extra money into super

you really should have a chat with your financial advisor or do not be afraid to contact us

my personal email address [email protected] if you do want to know more

the other great way of increasing your super balance is through super investment

and inside super you can invest in pretty much anything that you want

however your options are limited by what sort of a super account that you have

there are three main different superannuation accounts

so you've got industry funds and this is the one that you would have heard of it's low

costs but low features

so you might only have three four eight ten, you know a small amount of investment options

you can also have what's called an investment or a retail superannuation account

and this really opens up the scope of the amount of investment options that you could

use

from hundreds to even thousands even to direct share trading

so maybe you want to go and buy shares in Google

maybe you want to have an ETF in gold ethical sustainable investments

you can invest in things that will make you money if the market crashes

so sometimes you just want extra investment options

and the third type is a self-managed super fund

this opens it up to pretty much anything

like investment property

the ability to borrow

you can even pool funds so you can have multiple people in one self-managed super fund

okay so we've talked about putting money into super and investing it but what about getting

money out of superannuation

what you have to do is to meet something called a condition of release

of course one of those is retirement and that one's pretty straightforward

but there are other reasons or ways in which you can get money out of superannuation

if you have met your preservation age and I've got the ages up here on the screen but

call it over the age of 60

you can take a percentage out of your super while you're still working

you can get money out of super on compassionate grounds financial hardship

there's even a system at the moment where you can help save for your first home deposit

inside super

so there are different ways in which you can get money out of super you just have to meet

a condition of release

the other thing to be aware of is there are things that will drain your super balance

so here I've just got a basic statement so other things will come out of your super is

your admin and investment fees

this is the cost of running your fund

you can find cheaper funds but cheaper doesn't always mean better

you've got tax so that 15% tax we were talking about before

the government will come and take that out of your superannuation account

and the other expense here is insurance

again just because it costs you money doesn't mean it's bad

and I'll add another link below about insurance inside super

because it is really really important and most people do just over look that point

okay so that's it, that is our basics of superannuation

I hope it helps if you want more general information check out the videos below

if you want personal help you can send me an email or have a look at that website

and you can click here if you want to see our video on how to find lost super

or click here if you want to see our video on super investment options

see you soon