Superannuation and the old age pensioner

2008-01-23 12:49:26

( Business )



Superannuation is a compulsory retirement fund of the Australian government that applies to all Australian workers who earn more than $450 a month and are aged 18 to 70. Superannuation dictates that employers are to deposit a portion of an employee’s income into a superannuation fund which can be accessed by the employee only upon retirement.

Although superannuation measures have been established for many years, superannuation was not made compulsory until in 1992 as part of a reform in Australian government retirement policies. The superannuation system was created to build upon contributions from a settlement between the federal government and the union movement in the late 1980s as part of a wage tax trade off. This paved the way for a system of increasing wages minus the inflation.

Superannuation is the solution to increases in old age pension payouts that are bound to put excessive pressure on the Australian economy.

Superannuation contributions are now made by employers on behalf of their employees at 9% of the employee’s income from a low of 3% when it first started. This percentage is not payable on overtime income but only on remuneration pay such as bonuses, shift and casual loadings and commissions. Superannuation has now gained popular support for its compulsory system but was met with widespread resistance when it was first introduced.

How superannuation works.
• Superannuation employer role. Employers make contributions to the superannuation fund of an employee at least every three months. The superannuation contributions are then invested during the employees work life and earnings minus taxes and fees plus the contributions both voluntary and compulsory are paid to the employee when he chooses to retire.

• Superannuation rights. Because superannuation funds are primarily for retirement, government strictly prohibits early access to superannuation benefits except in extreme circumstances. Exceptional reasons may include the need for medical treatment not covered through Medicare or an extreme lack of money.

• Superannuation Benefits. Superannuation benefits are split in three groups namely :
1. Preserved. These are kept in the employee’s superannuation fund until he reaches the preservation age of 55.
2. Restricted non-preserved. These are not preserved but an employee can only gain access to these benefits when he meets a condition of release such as employment termination in an employer superannuation plan.
3. Unrestricted non-preserved. These may be released upon request of an employee who has previously fulfilled a condition of release and who does not want to access money from his superannuation fund.

• Superannuation taxes. Superannuation is taxed on earnings, contributions and final output at 15%. This amount is much lower than what an employee needs to pay if he received the money as earnings.

• Superannuation counterpart contribution fund. Only recently, government has devised an incentive scheme of government co-contribution of over a thousand dollars for lower income employees who make personal payments to their superannuation fund.

More information on superannuation is available from a number of resources including the internet. You may also check web listings under best pension, nhs pension scheme, pension annuities, pension lawyer, pensions jobs and prudential pension.


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