Superannuation questions

[daddy_4_eyes]

I know I'm a bit young to be thinking too much about superannuation, but might aswell start early, ey? Anyway, with the new super rules coming up in June, I wanted to find out a bit more information on superannuation before I choose a fund for myself.

Some questions:
1) According to the ATO website, there are two RBL limits. One for lump sum, and one for pension. How does the government distinguish between a pension and a lump sum? That is, what is the maximum amount one can take out as a pension before the government says "sorry, thats considered a lump sum withdrawal".

2) I know there's a maximum contributions limit per year. Does this mean contributions from the employer, or does it include income generated by the fund, such as dividends and interest?

3) Considering my age (21yrs old), would I be better off directing my fund to a high risk portfolio?

4) Should I bother with voluntary contributions to my fund (i.e. ask my employer to contribute a portion of my salary to my super)? If so, how much? I've heard that contributing as little as $30-40 dollars a week can make a significant difference by the time you retire.


Thanks in advance for any information.

 

[1jasonoz]

I know I'm a bit young to be thinking too much about superannuation, but might aswell start early, ey? Anyway, with the new super rules coming up in June, I wanted to find out a bit more information on superannuation before I choose a fund for myself.

1st July actually. And check to see if you are covered by the new choice of fund rules, alot of employees will not.

1) According to the ATO website, there are two RBL limits. One for lump sum, and one for pension. How does the government distinguish between a pension and a lump sum? That is, what is the maximum amount one can take out as a pension before the government says "sorry, thats considered a lump sum withdrawal".

http://www.avsuper.com.au/rulesandregs/taxation/reasonablebenefit.html

Reasonable Benefit Limits (RBL) are set by the Government. The amount of the RBL is less if you take your benefit as a lump sum than if you take it as a pension.

When taking your benefit, that part of your total superannuation benefit from all sources that is less than the RBL is concessionally treated for tax purposes.

Any part of your total superannuation benefits from all sources that exceeds the RBL is taxed at the top marginal tax rate.

2) I know there's a maximum contributions limit per year. Does this mean contributions from the employer, or does it include income generated by the fund, such as dividends and interest?

The maximum contributions is all deducted(means you only paid 15% tax on these contributions, i.e salary sacrifice and employer contributions) contributions paid into the fund in any one financial year. This does not include any income that you have earned on your super account during the year, and also varies on your age in that financial year.

2003-2004 limits

less than 34=$13,233
35-49=$36,754
50+=$91,149

3) Considering my age (21yrs old), would I be better off directing my fund to a high risk portfolio?

Totally dependent upon the individual, but the belief is the longer the time frame until you may need to use your investments, the higher the risk you should take, as GENERALY higher risk means higher returns, and visa versa.

4) Should I bother with voluntary contributions to my fund (i.e. ask my employer to contribute a portion of my salary to my super)? If so, how much? I've heard that contributing as little as $30-40 dollars a week can make a significant difference by the time you retire.

Totally dependant upon the individual, but the power of compound interest in the long term frame you are looking at(39 years) would have a major effect upon your final retirement account. Personally i have been putting 5% of my salary aside as salary sacrifice contributions since i was 17, almost 18 years later my super is massively higher than most people at 55 are retiring with right now .But what you sacrifice now, will be locked into the fund until your 60, and maybe longer if the government makes anymore changes.

You could always look at the sharemarket yourself?

 

[daddy_4_eyes]

Great, thanks for all that information. I really appreciate it.