At AMP we want to empower you to take control of your finances and own your tomorrow. But we know it’s not always easy. The language of finance can be complex and confusing.
In our latest jargon buster article, we explain superannuation terms in everyday language.
To access your super savings you generally need to have reached your preservation age and permanently retired from work. Your preservation age depends on your date of birth, so check out the table below to find yours.
|Date of birth||Preservation age|
|Before 1 July 1960||55|
|1 July 1960 – 30 June 1961||56|
|1 July 1961 – 30 June 1962||57|
|1 July 1962 – 30 June 1963||58|
|1 July 1963 – 30 June 1964||59|
|After 1 July 1964||60|
Superannuation guarantee (SG)
The payments your employer makes into your super. All Australian employers are required to pay at least 9.5% into their employees’ super accounts. The SG rate is frozen until 30 June 2021, after which it is set to increase gradually to 12% by 1 July 2025i.
Any payments into your super by your employer from your pre-tax salary (including super guarantee and salary sacrifice) up to $30,000 (or $35,000 if you’re over 49) that are only taxed at 15%, which is lower than most people’s marginal tax rate —unless you earn over $300,000, in which case you’re taxed at 30%.
You can pay up to $180,000 a year into your super with after-tax funds—or $540,000 spread over three years. Although your payments won’t allow you to receive a tax deduction, non-concessional contributions can still be a tax-effective way of saving for retirement. Any earnings are only taxed at up to 15% and any withdrawals are tax-free once you can access your super.
Depending on how much you earn, if you top up your super using after-tax contributions, you may receive up to $500 from the government.
The people you want to receive your super savings in the event of your death. It’s important to remember that your will doesn’t cover your super. So if you don’t name your beneficiaries, your super fund may decide who gets your money after your death.
There are two types of beneficiaries binding and non-binding. Having a non-binding beneficiary will give the trustee an indication of how you would like your super distributed, however making a binding nomination is the only way to make sure your super savings will go to the right people at the right time because your super fund is legally obliged to follow your instructions.
It’s important to note binding nominations are only valid for three years so you need to keep them up to date. If you have an AMP super account, you can check whether you have made a binding nomination at My AMP.
A financial adviser can help you make tax-effective contributions to your super and keep your beneficiaries up to date.