If you’re starting work for the first time, or your children are getting their first jobs, it’s very important to know all about superannuation. Young people are often at risk of not being paid their superannuation correctly or missing out on starting their savings for their retirement because they are unaware of their rights. Here’s a guide to help you or your child with their superannuation when they first enter the workforce.
What is superannuation and how is it calculated?
Superannuation is simply a system that helps you save money for your retirement. Money is paid into the fund of your choice and is invested to grow over time. Employers are liable to pay money into your super fund; this is called the super guarantee. You are eligible for the super guarantee if you are 18 years old and earning $450 or more before tax each month. Anyone under 18 years old, earning $450 or more before tax each month is also eligible if they are working more than 30 hours in a week. This guarantee varies depending on how much you earn but is calculated as 9.25% of your ordinary time earnings. This money is paid into your super account separately and does not come out of your regular pay. You can also make additional contributions to your super fund to boost it up. If you are a low income earner (many young people who are working casually or part-time often are) you may also be eligible for the super co-contributions which is when the Government also adds to your super account on your behalf to assist you with your savings.
Choosing a superannuation fund
Every time you start a new job, you will have to select a super fund. You can either stay with your own superannuation fund or go with the one of your employer chooses. It’s best to consolidate your superfund accounts and have just the one account to help you save money, keep track of your super and simplify the paperwork. You will be required to fill out a Standard Choice Form when you begin; this is where you outline what super fund you want to go with. Selecting a super fund is an important decision because it is something most people tend to stick with for life. There are many options available for young workers and there are even specific industry funds depending on what industry you are working in (eg retail, public sector etc). It’s important you do your research and be mindful of the following: fees, investment options, extra benefits, performance, insurance and service.
Keep track of your super
Superannuation is something that is very important later on in life but it’s also important to start saving when you’re young. Young people, in particular those who switch from job to job and have different super fund accounts are at risk of losing some of their super. It’s important when you start your new job to sit down and ask your employer some questions so everyone is on the same page in regards to super. It’s important you check your accounts to see if your super payments have been made and if they haven’t contact your employer. The ATO also has a process in place to help you track down last super and make sure you get everything you’re entitled to. This can now all be done through ATO online services.
What do you need for superannuation when starting a new job?
One of the most important things a young person needs when it comes to superannuation is a Tax File Number (TFN). If you don’t already have one, you must complete the application which can be found on the ATO website. If you don’t supply your TFN within 28 days of starting your job, your employer will have to take out 46.5% of your earnings as tax. You will also need to provide your TFN to your super fund.
Superannuation is very important and is something worth getting right – so if you or your children require any additional information or assistance, please don’t hesitate to get in touch with the team here at Fortis Accounting Partners. You can reach us on 02 9267 0108, or via info@exemplary-financial.flywheelsites.com.
