When we hear of international government handouts to keep major banks afloat, it's easy to forget that ordinary Australian employees have had access to significant government contributions for some time now, through Government Co-Contributions to Superannuation.
Now is a good time to start planning for the end of the 2008/09 financial year to ensure that you make the most of what the government has to offer.
How does it work?
It's so simple, whether you are employed or self-employed, close to retirement or a junior with a part time job.
If your salary $30,342 or less, and you make voluntary contributions to your superannuation of up to $1,000 in a year, you will receive a matching Government co-contribution of up to $1,500. People on salaries between this and the cut-off at $60,342 receive the contribution on a pro-rata basis. At the maximum rate, this represents a 150% return on capital: an excellent investment!
You are eligible if you:
"¢ Have made non-concessional (i.e. after-tax or voluntary) contributions during the financial year
"¢ Receive 10% or more of your total income for the year from eligible employment, carrying on a business, or a combination of the two,
"¢ Have tax-assessable income (plus reportable fringe benefits) of less than $60,342 in the financial year
"¢ Lodge an income tax return for the relevant year,
"¢ Are less than 71 years old at the end of the financial year, and
"¢ Don't hold a temporary resident visa during the relevant year.
Many of the people reading this article are eligible. So what are you waiting for?
Does it make much of a difference?
It certainly does, and the value increases the earlier in your working life you begin.
Take Nicole, a 25 year old, who is earning $30,000 per year . If she relies only on Superannuation Guarantee contributions from her employer, she can expect to amass around $300,000 after 40 years (based on average earnings and average indexed increases in income.)
However if she makes an additional voluntary contribution of $1000 every year, she will attract the full government co-contribution, making the total annual contribution to her superannuation $2,500. In that case, after 40 years, Nicole's superannuation would have reached roughly $481,200, an increase of more than $181,000. In the words of the Dire Straits song, that's "money for nothing."
What if I can't afford $1000?
The maximum voluntary contribution to receive the Government Co-Contribution is $1000 but you are free to make payments under that amount and still attract a co-contribution. Let's say you can only spare $500 this year. If you meet the other criteria, the government will contribute $750, making a total voluntary superannuation contribution of $1250. That's better than nothing and a great start. And you've got time to plan for a larger contribution in the following financial year.
Next steps
Talk to your superannuation provider to find out more. If you (or your spouse or other family members) are employed with an Anglican Organisation (or a select group of like-minded Christian organisations), enquire about plan membership with Anglican National Super and deal with people you know you can trust.
More information?
"¢ Contact your payroll department
"¢ Phone Anglican National Super on 1300 364 984
"¢ Phone the ANS Business Relationship Manager at AMP - Paul Willis on 02 9257 2694
"¢ Go to [url=http://www.amp.com.au/anglicannationalsuper]http://www.amp.com.au/anglicannationalsuper[/url]
Any advice given is general only and has not taken into account your objectives, financial situation or needs. Because of this, before acting on any advice, you should consult a financial planner to consider how appropriate the advice is to your objectives, financial situation and needs.
