PUTTING THE ENERGY BACK INTO SUPER
BUSINESS
THE PANDEMIC SAW MANY EMPLOYEES LOOKING AT OPTIONS FOR GETTING A LITTLE BIT OF EXTRA FINANCIAL HELP. JOBKEEPER AND JOBSEEKER HELPED BUILD THAT BRIDGE, BUT WITH MANY FEELING THE PINCH AND A LOSS OR REDUCTION IN INCOME, SOME EMPLOYEES MAY HAVE DIPPED INTO THEIR SUPER EARLY. This may impact them at retirement. Canstar crunched the numbers for a person aged 45 with a superannuation balance of $80,000. When they withdrew $20,000, they could see $55,603* less in retirement. As an employer, you want the best for your employees. Here are some tips on how your employees can supercharge their super.
1. Add what you can (even it is only a small amount) Statistics show most of us don’t take an active role in our super, viewing retirement as something ‘too distant from now’ to be considered in current financial decisions. The earlier money is put into super, the more an employee will have when they retire. The money employers put into super is just a start - if an employee adds a bit more, it can make a huge difference. For example, adding $20 a week over 40 years could add an extra $125,000 to an employee’s super at retirement.
Remind employees that when they make super contributions, even voluntary contributions are locked away until they retire, except for certain circumstances. To find out more, visit MoneySmart ‘Super contributions Optimiser’ at www.moneysmart.gov.au/grow-yoursuper/super-contributions-optimiser.
2. Combine your super ‘Lost super’ is a common issue for many employees. It’s easy for them to find their lost super - they can visit the Energy Super website or find more information on the ATO website. Combining their super into one fund saves employees time and money. They only have to pay one set of admin fees, have more control over their investment strategy and can more easily track their super to ensure they have enough for retirement.
Before combining their superannuation, employees should consider any insurance policies with their previous superannuation fund. They may want to apply to increase their insurance with Energy Super before consolidating their superannuation.
3. Government co-contribution up to $500 Low-income earning employees may be eligible for a co-contribution from the government. For example, if they earn less than $38,564 in this financial year and make a personal contribution of $1,000 (or more), the government will contribute the maximum amount of $500 into their super account. Employees don’t need to do anything. The contribution will automatically be applied when they complete their tax return. These tips will help your employees, following what has been a tough year. Even if they have taken the option of early release, there are still ways they can supercharge their super and minimise any impact on their retirement.
Damien Griggs Manager, Employer and Education Services Energy Super www.energysuper.com.au
*Source: https://www.canstar.com.au/superannuation/risks-access-super-early/. Based on a starting gross annual income of $86,237, growing 2.1% annually, per ABS Weekly Earnings and Wage Price Index, retiring at age 67. Person’s wage is assumed to have decreased by 20% for the first two years of the simulation (so they qualify for the early access scheme) after which the person’s wage returns to their original wage. Early withdrawal amount of $20,000 for Scenario 1 is applied to balance at as $10,000 withdrawal at the start of the fourth quarter of the first year and a second $10,000 withdrawn at the start of the fourth quarter of the second year. Employer contributions are presumed taxed at 15%. SG contribution amounts per Government announced rates. Investment returns assumed to be 7.90% per APRA average 10-year annualised rate of return. Net performance deducts average fees calculated at the start of each year and based on products in Canstar’s database for the person’s age as a percentage of balance (to the nearest $20,000 up to a maximum of $140,000) to account for diminishing dollar based fees as the balance increases. Average life insurance premium of $189.34 is assumed charged at the end of each year, increasing annually by 2.5%, based on products in Canstar’s database for an average balance of $80k and age of 45 years old. End balances at retirement are shown in “today’s dollars”, i.e. they have been adjusted for inflation of 2.5%. Please note all information on income, annual superannuation fees and performance returns are used for illustrations purposes only. Actual returns and the value of your investment may fall as well as rise from year to year; this example does not take such variation into account. Past performance is not a reliable indicator of future performance. Disclaimer: The information contained in this document is only general advice. It does not take into account your specific objectives, financial circumstances or needs. You should consider whether the information is appropriate to your specific circumstances before taking any action. If you wish to obtain a financial product as a result of the general advice, you should obtain a Product Disclosure Statement in relation to that product before taking any action. You should consider obtaining specific advice before making any decisions with respect to financial products. Information in this document is accurate as at 30 April 2021. Issued by Electricity Supply Industry Superannuation (Qld) Ltd (ABN 30 069 634 439) (AFSL 336567) as the Trustee and issuer of Energy Super (ABN 33 761 363 685). If you need assistance, talk to one of our financial advisers. Any information or advice included in this message is provided by ESI Financial Services Pty Ltd (ABN 93 101 428 782) (AFSL 224952). ESI Financial Services Pty Ltd is a wholly owned entity of Energy Super.
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