Five steps to take control of your super today

This summary has been prepared by Business Chicks based on AustralianSuper’s Masterclass.

Business Chicks has partnered with AustralianSuper because we share a goal of wanting women to achieve the best possible outcomes in their life, and that starts with financial empowerment. To kick off their series of financial Masterclasses, we were joined by Lauren Davis, Education Manager at Australian Super, who gave us a run-down of the benefits of superannuation, how the super of Australian women is faring right now, and practical tips on taking control of your super. 40% of older, single women in Australia will live in poverty and experience economic insecurity in retirement, so it’s vital to take it seriously.

Women and super – the stats don’t add up

Why does superannuation matter? Because despite living five years longer than men (on average), women are retiring with 42% less super*. There are a number of contributing factors^ to this startling statistic:

Women on average are taking five years out of the workforce – typically to care for children or their parents. During this time they are not earning contributions from their employer, and they are losing the opportunity of this compound interest in the future.
On average, Australian women earn $44,000 per year, with 43% of women working part time. Men on average are earning $60,000 per year (with a lesser percentage working part time).
There are currently 220,000 women nationally who are missing out on $1.25 million worth of super contributions because they don’t hit the $450/month earning requirement to receive contributions.

Benefits of superannuation

Superannuation payments will help fund the retirement of most Australians. According to the the Association of Super Funds of Australia, it will cost a single person $28,165 per year to fund a modest lifestyle in retirement. Now if you’re looking to fund a comfortable retirement, you’ll need $44,000 per year. With the full government age pension sitting at $24,000 per year, you will need to consider other sources of income to meet the standard for even a modest retirement. This is where super comes in.

Super is an investment vehicle that offers compound interest.
Depending on your super fund, you can choose where your money is invested – whether you want potentially higher returns with higher risk option that invests in Australian or overseas shares, or, a reduced risk option that invests in cash with potentially lower returns.
Super can be a tax-effective investment vehicle. When you’re working and in the accumulation phase, your super is growing thanks to compound interest, and any earnings on growth are taxed at 15%. This is generally a much lower tax rate than if you were to invest outside of super.
A key (and often overlooked) benefit of super is the option to also hold insurance inside your super. You can take out insurance for death, total and permanent disability cover, and income protection.

It’s generally not compulsory for self-employed people to pay themselves superannuation. Approximately 20% of self-employed people have no super (compared with only 8% of those employed by someone else). For both women and men, the self-employed have lower super balances across all age ranges.**

Five practical steps to take control of your super

Declutter your super and sort out your financial future in five easy steps.

Choose and compare the right super fund for you (consider performance, fees and insurance).
Consolidate (investigate any lost super you may be entitled to, and consider that with multiple super funds comes multiple sets of fees you could be avoiding). Before you consolidate, get the full picture. Ask your super fund for information about any fees or charges that may apply, or any other information about the effect this transfer may have on your benefits, such as insurance cover, before making a decision.
Contribute (you can contribute additional payments before tax, and add up to $100,000 after tax per year). Just make sure you consider your debt levels, contribution caps that may apply and tax issues before adding to your super.
Check insurance (ensure you are entitled to death, total and permanent disability cover or income protection if this is a priority for you).
Continue (make sure your employer has the correct details for your super account, ensure your beneficiary information is up to date and importantly – consider continuing with super throughout your retirement with an account based pension).

Opportunities available through superannuation

First Home Owner Super Saver Scheme (where you can invest additional money into your super and withdraw it to buy a home, with provisions of course!)
Government co-contributions
Spouse contributions
Contribution splitting from spouse in the following financial year
Small business tax exemptions on the sale of a business when contributing the proceeds into super
Carry-forward rule for before-tax contributions, (a new rule that allows you to carry forward any cap that you haven’t used in previous financial year)

As Australia’s largest super fund, and with a history of strong long-term performance, AustralianSuper is committed to helping members achieve their best possible retirement outcome. AustralianSuper can help you with small, simple steps that could make a big difference to your financial future and set you up for the retirement that’s right for you.

*ASFA Superannuation account balances by age and gender report, October 2017.

^Workplace Gender Equality Agency, Gender pay gap statistics (February 2020)

**ASFA Research and Resource Centre, Superannuation balances of the self-employed, March 2018

The views expressed in this article are those of Business Chicks as at the date of publication, and not AustralianSuper. This information may be general financial advice which doesn’t take into account your personal objectives, situation or needs. Before making a decision about AustralianSuper, you should think about your financial requirements and refer to the relevant Product Disclosure Statement, available at australiansuper.com/pds or by calling 1300 300 273. AustralianSuper Pty Ltd ABN 94 006 457 987, AFSL 233788, Trustee of AustralianSuper ABN 65 714 394 898.