Superannuation and Retirement in Australia
A good website to view is
http://www.seniors.gov.au/ where I found this quote:
There is no statutory retirement age in Australia.
In prior years, very few Australians over 50 waited until qualifying for the Age Pension before retiring.
An Australian Bureau of Statistics (ABS) survey found that around 76% of men had retired before 63 and 76% of women had retired before the age of 60.
The average, did so at the age of 58 for men, and 47 for women.
But.... in more recent times, more than a third of older Australian workers now plan to work until they are at least 70, in an astonishing cultural change, reported in February 2009.
An ABS report in November 2008 showed:
Men still in the workforce:
60 % of men aged 60 to 64 29 % of men aged 65 to 69 7% of men 70 and over.
Women still in the workforce:
39% of women aged 60 to 64 15% of women aged 65 to 69 2% of women 70 and over.
Pensions/Superannuation
Most Australian workers will be building their own superannuation up from the Compulsory Super Payments that their employers are making on their behalf.
This is currently at the rate of 9% on top of the persons Salary, as long as they earn more than $450 a month.
When being given a salary package figure, ask if the 9% super is on top of the total figure given, as some employers may include it in that figure.
Two Government websites for superannuation are:
Compulsory Super Payments:
Employers� superannuation guarantee obligations are calculated against ordinary time earnings. All employers must use ordinary time earnings to work out their contributions for you.
Ordinary time earnings are generally what you earn for ordinary hours of work, including over-award payments, commissions, allowances, bonuses and paid leave.
It excludes things such as annual leave loading and reimbursement of expenses and will generally exclude overtime.
ATO Link
An ATO webpage that explains to Employers what they have to do is at:
Super - what employers need to know
It may answer some of your own questions.
Which Australian Super Fund is best for you
The majority of employees will just accept whichever super fund the employer already has set up, as it is easier than looking around and setting up something yourself.
But, if you want to choose where your money is invested, you can pick from a large number of options. You do have to try to weigh up which is best though, or you may aswell just go with the employers one.
Your super does not have to be invested on the stock exchange, if you are not keen on that, as it can also be kept in a Cash Based Super Fund. A current example of that, is giving a return of 4% at April 2009, with no fees.
There are a few websites, such as Cannex and SuperRatings, that provide detailed comparisons of super fund performances. The top ten listed today showed an annual return of between 1.34% positive and 0.25% negative. Yes, that was the top 10.
On a personal note, I have been looking at "First State Super" recently, and by co-incidence they are currently listed as the lowest fee charging fund on a $50,000 account balance.
Lost Superannuation
Many people seem to forget where there superannuation is. This is caused by changing employers, and leaving the original Super where it was, and not moving it to your new fund.
The Australian Tax Office (ATO) offer a free service, if you have your Tax File Number (TFN), called 'Superseeker'. This is a free online service, and will look for your lost super in real time and instantly provide you with possible matches
There are also a few other options to try to locate any missing Super
Claiming Superannuation Payments before Retirement
To get money out of Super, other than as a Temp resident, you need to apply to the Australian Prudential Regulation Authority (APRA), with your reasons.
Permanent Residents and Citizens
Generally, you can withdraw up to $10,000 a year if you can prove financial hardship, and have been claiming Commonwealth income support for the past 26 weeks.
You can also access as much of your super as needed if you need to for a property foreclosure or pay medical bills for life-threatening illnesses etc.
If the money is needed to avoid house repossession, you need a letter confirming this from the lender.
If the money is needed for Life threatening medical bills, confirmation
of this is also required by the APRA.
Basically it isn't just a case of withdrawing it. You need to prove a good reason why. Other than that, it stays as super untill you are old.
Temporary Residents
Temporary Residents are able to withdraw their super when departing Australia permanently.
Tax may be deducted at either 35% or 45% (Jan 2009) depending on if the contributions received tax concessions or not.
More information on this is available at:
Government Assistance with Super Contributions
There is a scheme for some employed people called 'Super Co-contribution' where the government pay something to top up your own personal superannuation contributions.
Conditions (2008-2009) include that your gross income must be less than
$60,342 pa. and that 10% or more of your total income is from eligible employment, running a business or a combination of both.
You get the maximum benefit ($1,500 in 2008/09) if your income is $30,342. (Indexed annually)
Personal superannuation contributions are the amounts you choose to contribute to your superannuation fund from your after tax income. This is in addition to any employer contributions and any contributions made through a salary sacrifice arrangement.
When do you qualify for the Government funded Age Pension ?
- Men qualify for an Age Pension at 65 years or over.
- Women, depending on their date of birth, qualify for Age Pension at different ages. By 2014, the minimum qualifying age for women will be 65 years, making it the same for everyone.
What Residence Requirements does the Government Age Pension have?
To lodge a claim and qualify for Age Pension, you must be:
- in Australia on the day you lodge your claim,
- an Australian resident,
- have lived in Australia for long enough to satisfy qualifying residence
periods (normally TEN years). Note: there are some exemptions.
What Income Thresholds does the Government Age Pension have?
- Have Income below the threshold.
Under the
Income Test, a single person earning less than less than $132 per
fortnight may be entitled to the FULL pension which reduces to NIL when
they reach $1513.50 per fortnight. (Apr 2008 figures).
- Have Assets below the threshold.
Under the Assets test, if a homeowner has more than $535,250 in assets, as well as their home, they will not be entitled to any of the Government pension, but could be entitled to the full pension even with up to $166,750 in other assets.
These following figures are valid at July 2010. Full Information from
Centrelink
Current, 2010, Government pension payments are: $644.20 per fortnight for a single person, or $485.60 each for a couple, PLUS the following additional payments and benefits that people may be entitled to:
UK Pensions
British Pensions in Australia
The European Court of Human Rights has accepted a request for an appeal into the question of indexing pensions in those countries not currently indexed.
This will be heard before the Grand Chamber of 17 Judges on September 2nd, 2009.
British Australian
Pensioner Association
UK Government Pension
The UK Government age pension can be paid to you in Australia, on reaching Retirement age. The amount of the pension payment will be frozen at the rate
in force at the date of entitlement, or the date the person left the UK if
they were already a pensioner at that time. However, if you return to live
in the UK, you�ll receive a State Pension with all of the indexation increases.
British Pensions in Australia Inc. [BPiA] is a "not for profit" association
of volunteer expatriate British State pensioners, challenging the UK government's discriminatory, immoral pension legislation, which causes our UK pensions and those in Canada, South Africa and NZ to remain "frozen"; but in the USA, EU, Israel and some 20+ other countries, the UK State pension is regularly increased for inflation.
Contact:
If you live outside the UK and want a State Pension Forecast contact
Frequently asked questions for Living Overseas
If you are eligible for the Australian age pension, it may be reduced when your UK pension is taken into account, depending on Centrelink rules at the time. More details will be available at:
UK National Insurance Contributions whilst Overseas
- These are dealt with by the HM Revenue
& Customs - If you live abroad or are intending to go abroad, you may in certain circumstances, pay Class 2 contributions voluntarily instead of Class 3 contributions. See leaflet NI 38 Social Security abroad for more information.
- The weekly Class 2 contribution rate for 2004-2005 was �2.05, whereas the weekly Class 3 contribution rate was �7.15. From 6 April 2000 paying Class 2 NI contributions are less expensive than Class 3, and they can help you satisfy the contribution conditions to qualify for Incapacity Benefit or Maternity Allowance when you return to the UK. They will also help protect your entitlement to State Pension and bereavement benefits which can be paid anywhere abroad.
- In the Pensions Act 2007, the Government has made changes to the rules and conditions for building up a State Pension. These changes could affect your State Pension. See leaflet PDF Pensions Jan 2009 Updatefor more information.
The number of qualifying years you need to get a full basic State Pension is reducing to 30 for people who reach State Pension age on or after 6 April 2010, and having just one qualifying year of paid or credited contributions will mean you are entitled to some basic State Pension.
Private Pensions
This can be a tricky area, and professional help is often needed.
Most UK company and personal pension funds can be transferred to Australia, but the way in which transfers from UK pension schemes are taxed has changed, and the new legislation, introduced by both the UK and Australia, could allow a transfer to attract substantial benefits.
Companies that specialise in transferring Private UK pension funds
- PTD a Corporate Authorised Representative of Genesys Wealth Advisers
- Prime Advice Pty. Ltd
The above info is a provided as an information source only, I have no knowledge of how the companies perform.
Transferring Private UK Super funds after April 6th 2006:
Changes to UK Pension Transfers On 6 April 2006, as part of major pension reforms in the UK, a relevant UK regulations becomes effective. From 6th April 2006, any money transferred from a UK registered pension scheme to an Australian
Super fund will be subject to a tax of 40%, payable to the UK authority unless the Australian fund is a "qualifying recognised overseas pension scheme" (QROPS).
For an Australian superannuation fund to become a QROPS imposes a significant administration burden on the Australian Super Fund, requiring it to report to the UK regulators when rollovers, pensions or ETP's are made from its fund.
The costs involved in complying with these requirements are not insignificant, and there are also ongoing compliance and regulatory risks involved when complying with overseas jurisdictions. Australian Super funds may decide not to become a qualifying recognised overseas pension schemes.
UPDATE November 2009 - more than 200 Australian Super funds have become qualifying recognised overseas pension schemes. Many of these will be able to manage the paperwork for you at little or no charge. A list of these is now available at:
Qualifying Recognised Overseas Pension Schemes (QROPS)
Links
Useful Reading
