Superannuation and You!
“Do they pay your super?”
One of the most asked questions when it comes to Pilates Instructors discussing the benefits of working in an Australian Pilates studio, or other fitness related studio or business.
Some studios do and some don’t.
In this short article we are going to answer some important questions for you to consider* when it comes to Superannuation and You!
What is Super?
Why is it important?
Where is your super?
How do you make it grow over time?
What is Super?
Super is one way of saving for your retirement.
In Australia all employers pay superannuation for their employees and for contractors who meet certain conditions under the Australian Tax Office (ATO) legislation**
The current rate is 11% as at 1 July 2023.
It is important to remember that Superannuation is your money, your investment and needs to be managed in the same way you manage any other investment you own.
Why is Super important?
It is important because the money invested over time has the opportunity to grow, and grow exponentially.
When you are no longer working, this is the money that will pay for your lifestyle and your everyday needs and how much money you can spend in your retirement.
Where is your super?
Your Super will be invested in a Superannuation Fund – there are many to choose from.
The first and most important thing for everyone to do is to ensure they only have 1 (one) Super fund. I often see people who have had several different jobs who have 3 or 4 or even more super funds.
Each Fund charges fees so if you have more than one fund you are paying more than one set of fees. Obviously it is not a good idea to have more than one fund as you are paying multiple fees across the funds.
Fees can eat away at your Super investment, and I have seen examples where the fees outstrip the contributions.
When it comes to choosing one preferred fund, if your balance is not very big (say up to $100,000) fees are very important and so many people choose their employer fund, as the fees are sometimes subsidised by the employer. Alternatively people choose an industry fund because they tend to have lower fees than some of the retail funds.
Many Pilates Professionals will have monies already in a Super Fund that went with their previous career or other roles in other companies or businesses.
There has been a lot of merging of industry funds recently so if you choose a larger fund (such as Australian Super or ART) they are less likely to be taken over or merge.
Once your balance builds up you may want to look for a super fund offering more features.
Your Action: It is important to choose the one Fund that is most appropriate for you and your stage of life – then transfer all your Super into that Fund. Let your chosen fund know and they can make the transfers.
If you need to find your lost Super, the ATO has the ability to help you search for lost Super***
How do you make Super grow over time?
There are a number of ways to make your Superannuation grow over time:
1. Make sure that your employer has the correct Super Fund information
2. Check that all your employer contributions are all being paid into your Fund account. It is unlawful for employers to withhold employee contributions and paid in a timely manner
3. Assess your investment risk profile and make decisions which will maximise your investment return for you and your stage of life
4. Make additional contributions from your own funds at any time up to the permitted limit. Discuss options with your Funds’ managers or your accountant
5. Pay attention on a regular basis to ensure your monies are performing. Most funds will have an app or other online web access. Checking the balance once a year is not enough!
Asking the question “Do they pay your super?” is important.
And, managing your Super is your responsibility and will help you grow your Super investment.
* This is not considered personal financial advice, but just providing general advice on these topics based on my knowledge and experience. Any decisions need to be made in consultation with appropriate professions and based on your personal circumstances.
** You can read the ATO information here: https://www.ato.gov.au/businesses-and-organisations/super-for-employers/work-out-if-you-have-to-pay-super/super-for-contractors
*** The ATO can help you search for lost Super: https://www.ato.gov.au/forms-and-instructions/superannuation-searching-for-lost-superannuation
Ingrid is the Founder of Healthy Numbers – a training, coaching, and consulting business for existing business as well business startups and entrepreneurs. She is driven by her passion for helping people create and maintain financial well-being and especially through business ownership.
Ingrid has also written a book called 'So You Want to Start a Business; The Seven Step Guide to Create, Start and Grown your Business"
To find out more visit healthynumbers.com.au