Five more basics about super in Australia. (For Basics 1-5 see HERE)
6. Investment choice – Most funds allow you to decide how you want your money invested by the super fund, by choosing from your super fund’s investment options. If you don’t make an investment choice, then your super money is invested in a default investment option. The default option is usually invested in range of assets, known as a balanced investment option, although some super funds call it a growth option. Investments are spread across high and low risk assets to manage the risk that some investments may lose money.
7. Member reporting – Your super fund must send you regular reports (at least annually) on the fund’s performance, and on your own super account’s performance. Your super fund must also state fees charged, and show you any other transactions on your super account (such as the deductions for insurance premiums and taxes).
8. Preservation. Your money is preserved in super, which means you generally can’t take your money (benefits) out of the super fund until you retire at or after your preservation age (from age 55 to 60, depending on your date of birth), or when you satisfy another condition of release. To be allowed to withdraw your super you must, in super’s technical language, satisfy a condition of release which are very specific.
9. Co-contribution. If you make your own deposits that is non-concessional (after-tax) contributions to your super fund, depending income, the government may put some tax-free money into your super fund for you. This is known as the co-contribution and phases out on a sliding scale.
10. Contributions caps. The amount of super contributions that you can make each year is capped, or you pay penalty/extra tax.