Superannuation: What you need to know as a young professional
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We get it. The life of a young professional can be overwhelming. You’re new to the workforce, trying to navigate your way through a new industry, starting at the bottom and often working long hours. All while trying to maintain a social life and make the most of being young. This doesn’t leave much time to think about superannuation.
But did you know that superannuation is one of the most significant financial assets most Australians will ever have? By taking some simple steps now, you can make a considerable difference to your superannuation in the long run.
What is superannuation?
Superannuation, also known as “super”, is extra money that employers are legally required to pay their employees, on top of their wages. Nearly everyone with a job—be it full-time, part-time or casual—is required to join a superannuation fund. Over time your super compounds, so that when you’re able to access your money, it can provide financial support for your later years.
How does superannuation work?
When you start a new job you’ll be asked to nominate a superannuation fund. Then your employer will set aside money to pay into your superannuation account and pay it by the quarterly due dates. This money (equivalent to 9.5% of your wage) is then professionally invested into things like shares, property, government bonds and cash deposits.
Let’s say you’re on a salary of $65,000. Your employer would need to put $6,175 into your super account ($65,000 x 0.095).
If you continue like this, in 10 years time, you could have a super balance of around $60,000!
Super is YOUR money
The key thing to remember about superannuation is that it’s YOUR money, and you should look after it just like your regular pay and your savings accounts.
With this in mind, these are the basics to getting your super organised:
Choose a fund that’s right for you
Beware of having multiple funds, it means you’re paying duplicate fees
Search for old super balances, you may have accounts you don’t even know about
Check your super balance and ensure you’ve been paid by your employer
Keep your super organised, especially when you change jobs.
Finding a fund that’s right for you
When you’re choosing a super fund there are a few things to consider:
Fees – excessive fees can quickly erode your super balance, especially when you’re starting out and have a small balance.
Performance – look for consistently good performance.
Investment options – make sure you understand, and are comfortable with the investment option you’ve chosen.
Insurance – check what insurances come automatically with the account and how much it costs. Determine if the costs and benefits are suitable for you.
Extra benefits – consider if they’re specifically designed to suit your needs/lifestyle.
Professional Super has been designed for young professionals. It has discounted fees for balances under $5,000, and zero fees for balances under $1,000. There are three investment options to choose from once your balance reaches $5,000. And there’s also a fully-featured app to keep track of your super money. We’ve also made it easy to use your super to save for your first home using the government’s First Home Super Saver Scheme.
Multiple funds and duplicate fees
Having multiple super funds means there are duplicate fees, and insurance premiums, eroding your super balance. And a lot of people have accounts they don’t even know about. You could have a super fund, for every job you’ve ever had. Even the old casual jobs. If you didn’t provide your employer with your super fund details when you started, a default account may have been opened on your behalf.
It’s surprisingly common for people in their 20’s and 30’s to find that they have two, three, four or sometimes even more super accounts they didn’t even know about. All charging fees, and possibly insurance premiums, often for years!.
Now some good news. It’s easy to search for old super accounts. And you can get your super organised in just a few minutes.
At Professional Super, you can search for all of your old super funds using our ‘Super Search Party’. All you have to do is:
Join Professional Super and enter your Tax File Number.
Select ‘Super Search Party’ and enter a security code that we’ll send you via SMS
Choose the accounts that you’d like to combine into your new account.
Note: this service uses the ATO’s SuperMatch system, which is currently unavailable, speak to our Member Services Team for help transferring your funds.
Keeping your super organised
The first step is to make sure you’ve been paid super. The amount your employer sets aside for your super will be written on your payslip. But that doesn’t necessarily mean it’s been paid. Your employer is only required to make superannuation payments on your behalf at least four times a year. The cut-off dates for these payments are the 28th January, 28th April, 28th July and the 28th October.
The second step is to make sure you always bring your super account details with you, when you start a new job. People usually remember to take their bank account details, and their tax file number when they start a new job. But unfortunately super account details are often forgotten. And if you don’t nominate your super fund when you start, you could end up opening another super account. In most cases, you have the right to choose your own super fund.
It’s a good idea to login at least four times a year, check your balance and your contributions. And if you’ve changed jobs, doing another super search can confirm that you’re being paid into the account that you have chosen.
Still not too sure what superannuation actually is? You’re not alone, it’s not just young professionals that are disengaged with super—it’s Australians in general.
Super is more important than you may realise. As a young professional, starting to think seriously about your super could help you build what could become one of your biggest assets in the future. So join us today at Professional Super to get your super organised.
Note: Superannuation projection is based on ASIC’s MoneySmart calculator. Calculations are based on an income of $65,000 p.a. fees of $78 and 0.99% p.a., and a growth investment strategy.
This is general information only and does not take account of your individual investment objectives, financial situation or needs. Before acting on it, consider if the information is appropriate and whether you need to speak to an accredited professional.
You should also consider the Product Disclosure Statement before making any decision. This product is issued by Tidswell Financial Services Ltd (ABN 55 010 810 607, AFSL No. 237628, RSE L0000888) as trustee for Student Super Professional Super which is a sub-fund of the Tidswell Master Superannuation Plan (ABN 34 300 938 877, RSE R1004953). Student Super Professional Super Pty Ltd (ABN 31 617 160 791; AFSL No. 499786) is the Founder and Promoter of Student Super Professional Super which is marketed under two brands; Student Super and Professional Super.
Past performance is not indicative of future performance.