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How super works | Updated: 11:46:21 PM, Wednesday July 03, 2013 How super works

If you’re new to the workforce or just new to super, here’s a quick and easy guide to super in seven steps.

If you’re new to the workforce or just new to super, here’s a quick and easy guide to super in seven steps.

Together with your home, your super is likely to be one of the most valuable assets you ever own. That means it’s important to understand where it’s invested and to be active and engaged in managing it.

So if you’re new to the workforce or just new to super, here are seven steps towards understanding your super and staying on track.

1. Getting your due

If you’re over 18, your employer generally has to pay you super, whether you’re working part time or full time. If you’re under 18 and working 30 hours a week or more, you should also generally get super.

If you’re a contractor, you may be entitled to super if you’re being paid for your labour, even if you invoice using an Australian Business Number (ABN).

2. Choosing a fund

When you start a new job, your employer should give you information about your super choices and the employer’s default super fund. Most people can choose their own fund, except for employees hired under some older styles of workplace agreement, including state awards.

If you have a choice of super funds, you can tell your employer which fund you’d like your contributions paid into, using a standard choice form from the Australian Taxation Office (ATO) or from your employer.

3. Making contributions

Once you start work, your employer needs to pay Superannuation Guarantee Contributions into your super fund account, currently equal to 9% of your salary, or they will be liable for Superannuation Guarantee Charge.

You can also make extra contributions yourself, either by putting some of your pre-tax salary or your after-tax salary into super by asking your employer to make extra contributions. A pre-tax contribution is called salary sacrifice’. It can be an especially effective way of adding to your super, because these contributions are only taxed at 15%, instead of your marginal tax rate.

4. Staying on track

Once your money is in the fund, your fund manager invests it in the options you’ve chosen, whether shares, bonds, property, cash, alternative investments or a mixture of all and more. They’ll send you regular statements to let you know how your savings are going. Colonial First State also enables you to check your savings online, 24 hours a day.

5. Switching jobs

When the time comes to move on to your next job, remember to keep track of your super. If you have a choice of funds in your new job, you may be able to ask your new employer to keep contributing to the same super account as before. If not, you may want to transfer your existing savings into your new fund. That makes it easier to keep track of your money, as well as potentially helping you save on fees. Contact us to find out more about combining your super.

6. Accessing your money

Generally, your money stays invested until you’re at least 60 and ready to retire. Unless you’re in severe financial hardship, incapacitated or seriously ill, you will not be able to access it early. So super is very much about preparing for retirement.

7. Getting an expert opinion

Super is a great way to invest, but it can also be complicated, and everyone’s situation is different. If in doubt, it’s a good idea to talk to a financial adviser. They can help put you on the right track today, so you can enjoy a brighter future tomorrow.

Find out more

Read more about super and your first job with our fast and easy guide for new workers, choose a super fund in five steps, combining your super or use our handy online calculator to find out how much super is enough.

This article is proudly brought to you by Colonial First State. Wherever you stand on investments and super, Colonial First State has options for you. To find out how Colonial First State can help you visit, read this article or via the icons below.

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This document has been prepared by Colonial First State Investments Limited ABN 98 002 348 352, AFS Licence 232468 (Colonial First State) based on its understanding of current regulatory requirements and laws as at 15 January 2013. This document is not personal advice and provides information only. It does not take into account your individual objectives, financial situation or needs. You should consider talking to a financial adviser before making an investment decision. Copyright © 2013 Colonial First State Group Limited.

All rights reserved.

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