Superannuation managed funds are very popular in Australia as a way of saving for retirement. They offer a chance to plan a good retirement. The employers of Australians aged between 18 an 70, who earn more than $450 every month, must make a contribution of at least 9% of the employee’s salary to a superannuation fund on their behalf. Most employees are able to nominate their own superannuation managed funds rather than using their employers choice.
Superannuation managed funds are excellent because they are very tax efficient. The tax concessions available apply to the contributions, to the earnings that the fund generates and the accumulated wealth of the fund. The investment returns and contributions may be taxed at 15%. Capital gains on assets held for longer than a year are taxed at just 10%. They are the ideal retirement savings plan as they can be accessed completely tax free after the age of sixty. The superannuation managed funds should be started as soon as possible to maximize the long term gains.
There are several kinds of superannuation managed funds, all of which have advantages and disadvantages. The retail superannuation managed funds are controlled by financial institutions, and can be invested in by the general public. Most people choosing this funding option will opt for a Master trust. The Master Trust offers a broad range of investment options, along with other benefits such as death and disability insurance.
Corporate super funds tend to only be open to employees in a particular corporation, although they have the option of choosing another scheme. The funds may carry a number of benefits due to size. However employees who change jobs may not be able to contribute to the same scheme, although some employers will continue to offer the scheme to ex-employees.
Profit for members superannuated managed funds tend to be for employers in specific industries or unions. The profits are returned to the members and the fees can be lower. However the investment options may be more limited than other investment plans.
Superannuated funds do not have to belong to a large group, as four people can set up their own self managed fund. The fund members can also be the trustees, and may have greater investment opportunities. The downside is that they can be quite expensive to run.
The public sector has its own superannuated managed funds for its employees. The funds also give additional cover such as disability insurance, death cover and in some cases salary continuance cover.
These funds are all quite different so it is important that the investor understands the advantages and disadvantages of each.