Superannuation is an investment scheme, that’s been designed to accumulate wealth in working life and support you financially while you retire. The money comes from contributions made into your super fund by your employer or you and, ideally, and or topped up by your own money.
The sole purpose of this is that members are benefited when they intend to retire and all the dependent members are benefited in the event of member’s death.
While it started in 1988, by 1992 all workers were covered by compulsory payment known as the superannuation Guarantee.
In 2007 itself all the superannuation fund of baby boomers is reaching $1 trillion, making Australian managed fund as the 3rd largest fund.
When compulsory superannuation was introduced at this time, the federal government was sending a clear message to everyone that they have to fund their own retirement.
To encourage participation, the government has introduced a number of tax concessions that may interest you.
Apart from compulsory contributions, people can choose to do personal contributions to boost up super for retirement. You have to note that once you made a contribution, you cannot legally touch the money until you satisfy the condition of release.
There is a limit as to how much individuals can contribute to super in a given financial year, any additional contributions are taxed at normal taxation rules and can be taxed up to 47% depending on your income.
Superannuation investment returns are taxed at a concessional rate if the funds are genuinely held to benefit members during their retirement.