Finchat for fund membersABC Superannuation FundHow does ABC super work?ABC and Salary sacrifice contributionsABC and Gov co-contributionsABC and SG contributionsABC and Spouse contributionsABC and Personal contributionsABC and Downsizing contributionsCan ABC consolidate my superWhat fees do I pay in ABC?ABC and Account-based pensionsTransition to Retirement with ABCABP and age pensionWill I have enough super?Low income offset

Finchat for fund members

Fund members can access all the articles, info-grams and calculators to help them with their financial literacy and to make better financial decisions. They will also be able to access their fund rules and benefits with a few clicks.

All pages will reflect the livery of the fund and the content will reflect  the rules of the fund. The Tabs below show an example of the “ABC” fund.

The pages can be hosted by Finchat or on the Fund’s site if it has the appropriate architecture.  Finchat will perform all maintenance, updates and upgrades according to agreed standards.

About the ABC Superannuation Fund

ABC Super looks after $12 billion in assets entrusted to us by over 800,000 members. We are a profit-for-member super fund acting in the best interests of members and not shareholders.

ABC Super is committed to strong long-term results that will boost your retirement savings.

ABC Super is “MySuper” Authorised 12 345 678 900 and can accept all Superannuation Guarantee contributions from employers. A copy of the  ABC’s MySuper Balanced option is available at abc.com/MySuper

You can find important information, including our Trust Deed, Annual Report and remuneration for executive officers, at abc.com

Click here to view and download the member booklet

Click here to view and download the product disclosure statement

Click here to view and download the investment booklet

Click here to view and download the insurance booklet

How does ABC super work?

Contributions from your employer or your personal contributions  accumulate together with growth on those contributions. The more you contribute and the better growth you enjoy the more you will have to retire on. Compound interest (interest on interest) is the biggest driver of your super balance.

Contributions are taxed at 15% unless your income exceeds $250,000 in which case they may be taxed at 30%. Income within the fund is taxed at 15% while it is in accumulation phase. After retirement any super rolled into pension phase (maximum of $1.6 million) is not taxed at any point.

See the calculation of tax on contributions.

What are salary sacrifice contributions?

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Calculate – excess salary sacrifice

Salary sacrifice contributions involves sacrificing salary for super contributions. This has the following consequences;

  • Your salary decreases and so does your taxable income. You pay less tax.
  • The contribution is taxed at 15% and so there may not be much benefit for those on low incomes as their salary may have been taxed at a lower rate had they not sacrificed it.
  • If your income is over $250,000 then contributions may be taxed at 30% making the strategy even more challenging.
  • If you are on a higher tax bracket there is an immediate gain as a result of the income being taxed at 15% instead of their higher marginal rate.
  • The contributions boost your retirement savings.

How much salary can I sacrifice?

  • You can contribute and deduct $25,000 pa. This includes your SG contributions.

From 1 July 2017 the concessional contribution limit is $25,000 for all groups. If your super balance is below $500,000 you can carry forward any unused portion for up to 5 years.

I am self employed. Can I salary sacrifice?

Yes, you can make pre-tax contributions in exactly the same way and to the same extent as an employed person. That means you can contribute and deduct (for tax purposes)  $25,000 pa.

For example;

John earns $70,000 pa and makes a salary sacrifice contribution of $10,000. The net benefit is as follows;

No salary sacrifice With salary sacrifice
Gross income $70,000 $70,000
Salary sacrifice $0 $10,000
Taxable income $70,000 $60,000
Tax $15,347 $11,947
Net income $54,653 $48,543
Net benefit 0 $1,900

The net benefit is calculated as the net salary sacrifice contribution (less 15% tax) less the drop in net income. That is ($10,000 * .85) – ($54,653 – $48,543)

Tax on excess contributions

If you exceed the concessional contribution cap the excess is added to your assessable income with a 15% offset to acknowledge 15% has been paid on the contributions. You can release up to 85% of your excess contributions as an alternative strategy.

You are able to carry forward your unused concessional contributions cap space amounts from 1 July 2018  if you have a total superannuation balance of less than $500,000 at the end of 30 June in the previous year. Unused amounts are available for a maximum of five years and will expire after this.
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What are government co-contributions?

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Calculate – government co-contributions

The government co-contribution helps low and middle-income earners boost their superannuation by making a contribution of up to $500 pa. There is no need to apply. If you are eligible and the fund has your tax file number the government will automatically pay t into your account.

In order to qualify you must;

  • Make personal contributions to a complying super account.
  • Have income less than $53,564 (2020-2021 tax year).
  • 10% or more of your total income must come from eligible employment or carrying on a business.
  • Be less than 71 years of age.
  • Not be holding a temporary visa.
  • Lodge a tax return.
  • Have a total superannuation balance less than the transfer balance cap ($1.6 million for the 2019–20 financial year) at the end of 30 June of the previous financial year
  • Not have contributed more than your non-concessional contributions cap.

For example;

John earns $50,000 from eligible employment and makes personal (after tax) contributions of $3,000 to his complying fund. Because his eligible income is below $53,564 and his contribution exceeds $500 he will get the full $500 government co-contribution.

If, for example, he had only contributed $400 then that would have been the maximum government co-contribution.

What are superannuation guarantee contributions?

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Calculate – SG contributions

SG (superannuation Guarantee) contributions are compulsory superannuation contributions employers have to make on behalf of employees. From July 2014 this has been 9.5% of the employees salary.

Proposed SG rate
2015/2016 9.5%
2016/2017 9.5%
2017/2018 9.5%
2018/2019 9.5%
2019/2020 9.5%
2020/2021 9.5%
2021/2022 10%
2022/2023 10.5%
2022/2023 11%
2023/2024 11.5%
2024/2025 11.5%
2025/2026 12%

What is the Superannuation Guarantee?

An employer has to pay the required rate by the quarterly date or be subject to the Superannuation Guarantee Charge (SGC) which is a penalty to the tax office. The SGC includes the SG owing, interest on the outstanding SG and an administration fee.

In most cases the SG is paid into the complying fund chosen by the employee but in some cases it is paid into a fund dictated by a workplace agreement or public sector fund run by state or Federal government. If an employee doesn’t specify a fund then the SG will be paid into a default fund with a MySuper option. MySuper is a low cost fund with restricted options.

Employees earning less than $450 per calendar month and those under age 18 working less than 30 hours a week are exempt.

From 1 July 2017 concessional contributions are limited to $25,000 for all groups. If your super balance is below $500,000 you can carry forward any unused portion for up to 5 years.

SG contributions are currently taxed at 15%. If your combined incomes are over $300,000 then these contributions will be taxed at 30%. The $300,000 limit reduces to to $250,000 from 1 July 2017.

For example;

John earns $50,000 pa. For the 2020-2021 tax year his employer must contribute $50,000 * 9.5% ($4,750). 15% tax will be deducted and so $4,038 will be paid into his superannuation account (less fees).

The concessional contributions cap (which includes SG and salary sacrifice contributions) is $25,000.

From 1 July 2018 you can use up to 5 years worth of any unused portions of your concessional cap if the total of all your superannuation funds is under $500,000 (this excludes super in pension phase). The unused portions start from 1 July 2018 and would allow a member to exceed the $25,000 cap.

What are spouse contributions?

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Calculate – spouse contributions

Spouse contributions

If your spouse has assessable income below $37,000 (plus report able fringe benefits) you can make contributions to his or her superannuation and receive a tax offset of up to $540 for those contributions.

You can’t contribute more than your partner’s non-concessional contributions cap, which is $100,000 per year for everyone. However, if your partner is under 65, you may be able to contribute up to three financial years of this cap in the one year (under bring-forward rules) which would allow a maximum contribution of up to $300,000.

Essential conditions are;

  • you contribute to the eligible super fund of your spouse, whether married or de-facto, and
  • your spouse’s income is $37,000 or less.

You will not be entitled to the tax offset when your spouse receiving the contribution:

  • exceeds their non-concessional contributions cap for the relevant year, or
  • has a total superannuation balance equal to or exceeding the general transfer balance cap ($1.6 million) immediately before the start of the financial year in which the contribution was made.

The tax offset amount will gradually reduce for income above this amount and completely phases out when your spouse’s income reaches $40,000.

The following eligibility requirements remain in place before and after 1 July 2017:

  • both you and your spouse must be Australian residents when the contributions are made
  • the contributions must not be made to satisfy a family law obligation to split contributions with your spouse
  • the contributions must be made to a complying superannuation fund or a retirement savings account on behalf of your spouse
  • you and your spouse must not be living separately or apart on a permanent basis when the contributions are made
  • the contributions must not be deductible to you.

What are personal contributions?

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Calculate – personal contributions

Personal (after tax) contributions can be used to boost your superannuation. Benefits of this strategy are;

  • The contributions boost your retirement savings.
  • You can bring forward 3 years contributions ($300,000) if you are under age 65.

Who can make personal contributions?

  • Anybody under the age of 18.
  • Between the ages of 67 and 75 you must satisfy the work test. This test is waived if your super balance is under $300,000.
  • Personal contributions cannot be made after age 75 without passing the work test.
Work test

To satisfy the work test, you must work at least 40 hours during a consecutive 30 day period each income year in order for your fund to accept a personal super contribution for which you can claim a deduction. The work test exemption applies from 1 July 2019. To meet the work test exemption criteria, you must have:

  • satisfied the work test in the income year preceding the year in which you made the contribution
  • a total super balance of less than $300,000 at the end of the previous income year
  • not relied on the work test exemption in a previous financial year.

For example;

John contributes $300,000 into his super fund using after tax money. As long as this is made no more frequently than every three years he will not have exceeded the contribution cap. If he wants to contribute every year he must make sure that the total in any rolling three year period does not exceed $300,000.

Downsizing contributions?

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From 1 July 2018, if you are 65 years old or older and meet the eligibility requirements, you may be able to choose to make a downsizer contribution into your superannuation of up to $300,000 from the proceeds of selling your home.

Your downsizer contribution is not a non-concessional contribution and will not count towards your contributions caps. The downsizer contribution can still be made even if you have a total super balance greater than $1.6 million.

The downsizer contribution will count towards your transfer balance cap, currently set at $1.6 million. This cap applies when you move your super savings into retirement phase.

You can only access the downsizer scheme once.

Downsizer contributions are not tax deductible and will be taken into account for determining eligibility for the age pension.

There is no requirement for you to purchase another home.

What are the requirements?

  • you are 65 years old or older at the time you make a downsizer contribution (there is no maximum age limit)
  • the amount you are contributing is from the proceeds of selling your home where the contract of sale exchanged on or after 1 July 2018
  • your home was owned by you or your spouse for 10 years or more prior to the sale – the ownership period is generally calculated from the date of settlement of purchase to the date of settlement of sale
  • your home is in Australia and is not a caravan, houseboat or other mobile home
  • the proceeds (capital gain or loss) from the sale of the home are either exempt or partially exempt from capital gains tax (CGT) under the main residence exemption, or would be entitled to such an exemption if the home was a CGT rather than a pre-CGT (acquired before 20 September 1985) asset
  • you have provided your super fund with the Downsizer contribution into super form either before or at the time of making your downsizer contribution
  • you make your downsizer contribution within 90 days of receiving the proceeds of sale, which is usually at the date of settlement
  • you have not previously made a downsizer contribution to your super from the sale of another home.

Consolidating super

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Yes! You can consolidate your super funds into the ABC fund. There are three ways;

1. myGov

  1.  Create a myGov account then link the ATO to your account.
  2.  Go to the ‘Super‘ tab.
  3.  Choose the fund you want to transfer your money from (called the ‘transferring fund‘) and the fund you want to transfer your money to (called the ‘receiving fund‘) from the funds listed.
  4.  Confirm your selection and your funds should move your accounts into one account within three days.

2. ATO’s paper form

  1. Download a rollover initiation form from the ATO’s website.
  2. Complete a form for each fund you are transferring a benefit from.
  3. Send the form to the fund you are moving your super money into.
  4. The fund you have chosen to move your super money into then contacts the other fund and requests the transfer.
  5. The other fund must transfer your super money within 30 days (for paper requests). Exceptions apply. See the ATO website for more information.

3. Contacting us

If you know you have super with another fund you can consolidate your super by:

    1. Complete the “Consolidate your super form” online or
    2. Download and complete the “Combine your super” form and email it back to us.

View and download the consolidation form

Why consolidate?

There are many reasons to consolidate your super into a single fund but fees and the convenience of monitoring a single fund are dominant motivations.

Reduce Fees

Multiple funds means duplicated fees. Typical fees are;

  • Member fees – these are administration fees that will be duplicated in multiple funds.
  • Investment fees (MER) – these are the fees charged to invest your funds usually a percentage of the balance. This is often the biggest cost.
  • Contribution fees – these are the fees charged to collect and invest fees. They would be duplicated in multiple funds.
  • Adviser fees – these are the fees paid to an adviser for personal advice. They would be duplicated in multiple funds.
  • Insurance premiums – these are the premiums paid for your insurance cover in the fund.
  • Other fees – there could be other fees such as establishment fees, withdrawal fees, exit fees, performance fees, switching fees and more.

Over 30 years, a 1% reduction in fees results in a 20% increase in benefit.

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Easier to monitor super

Multiple funds means multiple member statements detailing contributions, performance and fees. The member then has to collate all this information to get an accurate picture.

Consolidating all your funds into a single fund means there is only one member statement which will give an accurate picture of your superannuation arrangements.

Overall spring clean

Consolidation is an opportunity to give your super a “spring clean” and address the other important elements of your super.

  • Insurance. Which fund offers the best cover at the best premium? Be sure you will get cover in the new fund before switching.
  • Returns. Past performance is no guarantee of future performance but do you expect better performance in any fund?
  • Asset mix. The new fund must have an asset mix that matches your risk profile.
  • Costs. Which fund has the better cost structure.
  • Service. Do any of the funds have a service benefit you value like on-line switching?

What fees do I pay in ABC fund?

Fees in the ABC fund

  • Member fees – ABC charges a member fee of $45 per month to administer your account.
  • Investment fees (MER) – these are the fees ABC charge to invest your funds. It is charged as a percentage of your balance and depends on the investment profile you chose. Generally the more shares in your portfolio the higher the cost. MER fees range between 1% and 1.5% pa.
  • Contribution fees – there is a 15% tax on pre-tax contributions like salary sacrifice and employer contributions. There is no contribution fee for personal contributions.
  • Tax on income – there is a 15% tax on income which can be reduced by tax offsets.
  • Adviser fees – these are the fees paid to an adviser for personal advice. There is no charge unless you choose to engage a financial adviser.
  • Insurance premiums – these are the premiums paid for your insurance cover in the fund.
  • Other fees – there could be other fees such as establishment fees, withdrawal fees, exit fees, performance fees, switching fees and more.

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Account-based pension

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Calculate – account-based pension

You can transfer money from your ABC super to an account based pension like our ABC Income account.

An account-based pension is an income stream purchased with a lump sum from your superannuation fund. You must meet a condition of release such as reaching your preservation age (see below) or starting a TTR pension. From 1 July 2017 the total amount of superannuation that can be transferred into pension phase is capped at $1.6 million (The Transfer Balance Cap – TBC). This value is net (not gross) and so any loans like a limited recourse loan can be deducted.

Members with a balance in excess of $1.6 million will need to either:

  • transfer the excess amount to a superannuation account in accumulation phase; or
  • withdraw the excess amount from their account.

Any excess over the $1.6 million will be taxed as excessive non-concessional contributions.

The TBC will be indexed in $100,000 increments in line with the consumer price index (CPI). Where a member has used all the TBC then indexation no longer applies. If only  a proportion of the TBC has been used then the unused portion will continue to be indexed.

Equities held in pension phase are valued at their cost base on 30 June 2017 which could be lower than the market value. This means there could be CGT relief that can be applied to an investment gain in the fund.

Preservation age

Date of birth Preservation age
Before 1 July 1960 55 years
1 July 1960 to 30 June 1961 56 years
1 July 1961 to 30 June 1962 57 years
1 July 1962 to 30 June 1963 58 years
1 July 1963 to 30 June 1964 59 years
From 1 July 1964 60 years

How much has to be withdrawn?

Age Annual % draw-down from 21/22
55-64 4% (currently 2%)
65-74 5% (currently 2.5%)
75-79 6% (currently 3%)
80-84 7% (currently 3.5%)
85-89 9% (currently 4.5%)
90-94 11% (currently 5.5%)
95+ 14% (currently 7%)

You can withdraw lump sums (unless it is a TTR pension) at any time or roll the pension back into accumulation phase. The pension is not guaranteed and will be paid until it is exhausted. If you die the pension will be paid to;

  • Your estate, or
  • your beneficiaries, or
  • the reversionary beneficiary (if any).

If the reversionary beneficiary is a child they will receive the payments until turning 25 and then the balance will be paid to them as a lump sum.

A spouse or dependent may receive the benefit as a pension or lump sum. Non-dependents must take the benefit as a lump sum.

The pension is assessed by Centrelink. Click here for more details.

Other benefits include;

  • No tax is paid on the pension unless it is a TTR pension in which case 15% will be paid.
  • Payments are received tax free after age 60.
  • Between ages 55-59 the taxable portion is added to assessable income with a 15% offset.

Members need to be sure there is no conflict between any binding nomination form and the reversionary beneficiary of the pension.

Transition to Retirement (TTR)

Calculate – TTR

A transition to retirement strategy allows someone who has reached preservation age and still working, to access their superannuation by buying a pension. This pension cannot be converted back to a lump sum. The additional income can be used to either boost their superannuation or to supplement income should they choose to work fewer hours and therefore earn less income.

Strategy #1: Boost your superannuation

Buy an “Account Based Pension” and draw down between 4% and 10% of the account balance. From 1 July 2017 the interest free concession has been lost and earnings are taxed at 15%. The $1.6 million cap will not apply to TTR pensions.

You then make a salary sacrifice contribution to your super fund and use the pension to replace the salary you have forgone.

Case study

Current ($) With TTR strategy ($)
Gross salary $100,000 $100,000
Less Salary sacrifice contribution $0 -$25,500
Plus TTR pension $0 $20,600
Taxable income $100,000 $95,100
Tax plus Medicare -$26,947 -$25,134
Less pension offset $0 $3,090
Net tax -$26,947 -$22,044
Disposable income $73,053 $73,056
SG contributions $9,500 $9,500
Salary sacrifice contribution $0 $25,500
Investment returns $18,000 $18,000
Less 15% contributions tax -$1,425 -$5,250
Less Pension drawdown $0 -$20,600
Less Tax on earnings -$1,440 -$1,440
Benefit to super in yr 1 $1,075

Strategy #2: Use the pension to supplement your salary

If you decide not to reinvest the pension but to use it to supplement a reduced salary it could look like this;

Current ($) With TTR strategy ($)
Gross salary $100,000 $70,000 ($30,000 less)
Less Salary sacrifice contribution $0 $0
Plus TTR pension $0 $24,078
Taxable income $100,000 $94,078
Tax plus Medicare -$26,947 -$24,637
Less pension offset $0 $3,612
Net tax -$26,947 -$21,025
Disposable income $73,053 $73,053

Notes

You would only need to withdraw $24,078 to replace the $30,000 drop in salary.

From 1 July 2017 the interest earned on TTR balances increased from 0% to 15%. This will be offset by any franking credits. On top of this, the concessional cap reduces to $25,000 a year so people receiving a TRIS will be taxed more and many will be forced to contribute less.
The loss of exemption on fund earnings does not affect the pension itself which will continue to enjoy the 15% offset.
It is advisable to obtain the assistance of a qualified financial adviser to choose the best pension, draw down amount and salary contribution.

Will my account-based pension impact my age pension?

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Calculate – impact of super on age pension

Firstly you must be of pension age to get the age pension.

Qualification age

Date of birth Qualification age
1 July 1952 to 31 December 1953 65 ½ years
1 January 1954 to 30 June 1955 66 years
1 July 1955 to 31 December 1956 66 ½ years
1 January 1957 and later 67 years

Under age pension age

If you are under age pension age and not drawing on your super then your super assets are not assessed by Centrelink.

If you are under age pension age and receiving payments from your super fund then your super assets are assessed by Centrelink. The super assets are taken into account for the assets test and may be also deemed to earn an assessable income for the income test.

Pension phase

New rules for account based pensions

New deeming rules came into effect on the 1 January 2015 that apply to all new pensions commenced after this date. The result is your super will be tested twice before you get the age pension. Firstly your super balance is assessed under the asset test and secondly income will be “deemed” to have been earned on the super balance and assessed under the income test. Retirees who do not draw down any income will be deemed to have done so.

The current deeming rate for singles is 0.25% on financial assets (which could include your super balance) up to $53,000 and 2.25% on the balance. For couples it is 0.25% on the first $88,000 of combined income and 2.25% on the balance. For example, a super balance of $300,000 will be deemed to earn (0.25% * 53,000) + (2.25% *balance) = $5,690 pa (for a single person). This would reduce the annual pension by around $1,435 pa.

Old rules

All pensions held before 1 January 2015 will be assessed under the old rules until they choose to change the product and so any changes should be made with caution and appropriate advice.

Under the old rules there is no deeming on a super balance although it is assessed under the assets test. The pension will be assessable under the income test (less a deductible amount representing a return of capital). This deduction prevents the super from being assessed twice which the new rules introduce.

If the pensioner withdraws a lump sum and spends it immediately on food or the mortgage then it is not assessable. If the lump sum is deposited into a bank account then it becomes a financial asset and assessable.

Asset test – fourth quarter 2020

Single homeowners will have an asset limit of $268,000 . Single non-homeowners will have a limit of $482,500.
Couple homeowners will have an asset limit of $401,000. Couple non-homeowners will have a limit of $616,000.
Every $1,000 over the limit reduces the pension by $3 (up from $1.50)

How much super is enough?

Calculate – do I have enough super?

The table below is the ASFA (Association Of Superannuation Funds of Australia) suggestion of what is “enough super”.

ASFA Retirement Standard – June Quarter 2020

Annual living costs Weekly living costs
Couple – modest $40,440 $775
Couple – Comfortable $62,083 $1,189
Single – Modest $27,987 $536
Single – Comfortable $43,901 $841

Will I have enough super?

Assuming an average salary of $74,724 pa, and 30 years to retirement, employer contributions (9.5% of salary) alone would generate $730,393 if growing at a net rate of 7% pa. If inflation averaged 2.5% during this time the real purchasing power of the final amount would be just $341,739. Assuming a net income of 5% in retirement, your super would generate $17,087 pa.
In order to meet the modest goal of $23,662 you would need to make salary sacrifice contributions of $3,000 pa. for the full 30 years. To obtain the “comfortable” goal of $42,861 you would need to salary sacrifice $11,900 pa till retirement.

The crucial factors are;

  • Time. The longer you contribute and enjoy growth the better.
  • Returns. The higher the returns the better. If returns were a net 9% instead of 7% in the example above you could achieve a “comfortable” retirement by salary sacrificing just $5,400 pa.
  • Inflation. Inflation can ravage your savings. If inflation was 6% pa instead of 2.5%, the real purchasing power would be just $114,128 instead of $341,739.
  • Contributions. The more you contribute the better and salary sacrifice contributions are a tax-effective way to do this.

Low income tax offset

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Calculate – low income tax offset

The Low Income Super Contribution (LISC) will be maintained as the Low Income  Tax Offset (LITO). Members earning less than $37,000 per year receiving concessional contributions will receive a refund of the 15% contributions tax that was paid. The refund is paid directly into their superannuation account.