Creating your investment portfolio by making contributions to a superannuation fund can be one of the most effective ways to save for your retirement.
What is a superannuation fund?
A superannuation fund is a long-term investment which is designed to help you to save money during your working life to support your lifestyle in retirement.
Contributions made to your superannuation accumulate during your working life and are invested in a range of investment assets, such as cash, fixed interest, shares, property and alternative investments.
The type of assets into which investments are made will depend on the investment strategy of your fund.
Profits from these investments, both income and capital growth, are added to your contributions to increase the value of your superannuation.
Once you have met a ‘condition of release’, generally when you have reached 57 years of age and have permanently retired from the workforce, you will be able to:
- withdraw your accumulated superannuation as a lump sum, or
- roll your superannuation across to a pension account and commence receiving regular income payments.
Contributions will generally be made by either yourself, your spouse and/or your employer.
As an employee, under the superannuation guarantee legislation (SG) or an industrial award, your employer will usually be required to make superannuation contributions on your behalf equal to 9.5 per cent of your annual wage or salary.
In addition to these SG contributions, you may also be able to make additional salary sacrifice contributions.
As outlined in the table below, the rate of SG contributions will increase gradually to 12 per cent by 1 July 2025.
2015/16 – 2020/21