However, it still remains one of the most tax-effective investment options especially if you are nearing retirement age.
The other benefit is that earnings, including capital gains, are tax-free once you are officially retried.
These two things make Superannuation a highly tax-effective vehicle for your investment dollars.
With the right super fund, you can have a lot of control over your investments - being able to spread your investments across fixed interest, property, Australian and international shares. It pays to shop around for lower fee funds - industry funds in particular generally offer comparatively low management fees on investments.
There are some things to be wary of:
- You can't touch the funds until you reach preservation age and retire (currently age 60 for most people)
- There is a cap on the balance of your super of $1.6m per individual
- You can only contribute up to $25,000 per annum out of your pre-tax salary and this cap includes any contributions that your employer will make
- You can only contribute up to $100,000 per annum out of your post-tax savings - although you can bring-forward 3 year's worth
- People earning over $180,000 per year will see their super tax rate increase from 15% to 30%, making it less attractive
So if you have spare cash in a savings account and you are approaching retirement then consider pushing it in to your super fund.
Contact us if you need help with any aspect of saving for retirement.