How does it compare to other investments?

When it comes to saving for retirement, superannuation is specifically designed to help you accumulate funds in an easy, tax-effective way.

Investment earnings in super

The money you earn over time from superannuation is taxed at a maximum of 15%¹. In contrast, earnings on investments outside of super, such as managed funds or direct shares, are taxed at your marginal tax rate.

Contributions to super

If you contribute to super through salary sacrifice (that is, by forgoing pre-tax salary), the contributions will be taxed at 15%¹ in the fund, which is likely to be lower than your marginal tax rate.

Any personal contributions you make to super from your after-tax salary are called ‘non-concessional contributions’. There is no contributions tax on these funds when you contribute, although earnings are still subject to 15%¹ tax.

Withdrawing your super

If you meet a condition of release, you can withdraw all of your superannuation tax free if you are aged 60 or over¹, whether you take it as a lump sum or withdraw it gradually through a retirement income stream.²

There are advantages to be gained from the latter. If you transfer your super to an allocated pension, annuity or similar product, rather than take it as a lump sum, you are not charged any tax, and you will not pay any tax on income received if you are 60 or over¹. If you are under 60¹, you may have to pay some tax on your super income, although tax offsets may be available.

 

If you’d like to know more about how superannuation can help you increase your retirement savings, you can use our online booking form to to organise an initial, no-obligation consultation with a Commonwealth Financial Planner and start planning for a better life today.

 

• Important information
  1. Correct as at 1/02/2011.
  2. Applies to taxed funds only. Does not apply to untaxed funds such as the Commonwealth Government Sector Super Scheme.
  
  This information is of a factual nature only and is not intended to constitute financial product advice. It has been prepared by Commonwealth Financial Planning Limited without considering your individual objectives, financial situation or needs. You should consider its appropriateness in light of your circumstances and consider seeking professional advice relevant to your individual needs before making a decision based on this information. Commonwealth Bank customers who wish to obtain information about retirement planning may do so by contacting a Commonwealth Financial Planner. Commonwealth Financial Planners are Representatives or Authorised Representatives of Commonwealth Financial Planning Limited ABN 65 003 900 169, AFSL 231139, a wholly owned but non-guaranteed subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124.