Superannuation: What You Need to Know

Superannuation is one of the biggest investments you will make in your life, and understanding how
it works is essential for Australians. In Australia, employers are required by law to contribute a
minimum amount of superannuation to their employees’ retirement funds. But what does that mean? How much super does my employer pay into your super fund? Let’s explore this topic further.

How Much Does Your Employer Pay In?

The current minimum amount of superannuation required by law for employers to pay on behalf of
their employees is 9.5% of the employee’s ordinary time earnings (OTE). OTE refers to the base wage
or salary paid before tax and excludes any additional payments such as bonuses, commissions, or
overtime. The 9.5% contribution must be made at least every quarter — that means four times a year
— and can be done through salary sacrifice or when paying wages directly into an employee’s bank
account. Employers are also required to provide a choice of funds for their employees to invest in.

What Is Salary Sacrifice?

Salary sacrifice is an agreement between an employer and an employee where the employee agrees
to forego part of their pre-tax income in exchange for non-cash benefits such as health insurance,
childcare fees, extra superannuation contributions or even car parking costs. This means that
instead of receiving money as part of their salary package, the employee chooses to receive these
benefits instead – with the added bonus being that these benefits are usually taxed at a lower rate
than cash income!

Does My Super Fund Make Investment Decisions For Me?

Yes! Your super fund makes investment decisions on your behalf so you don’t have to worry about
making them yourself – although you can always choose which type of investments you would like
your money invested in if you do wish to do so. When making investment decisions on your behalf,
your super fund considers factors such as age, risk tolerance and financial goals before deciding
where best to put your money. They will then continue monitoring those investments regularly and
make changes if necessary in order to ensure that they are performing optimally for you.
It’s important for Australians to understand how much their employer pays into their superfunds
each quarter so they know how much money they’re accumulating towards retirement over time. As
previously mentioned, employers must pay a minimum 9.5% contribution into each employee’s fund
every quarter – but it’s also possible for employees themselves (through salary sacrificing) or
employers (through extra contributions) to add more money over time if desired/possible. Everyone
should take some time out from their busy schedules and familiarise themselves with this important
information – after all, everyone needs a secure financial future! With proper research and
understanding around this topic Australians can ensure they have enough saved up when it comes
time for retirement!

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