Most developed countries have a framework for retirement saving. This facilitates financial freedom during retirement. You should not spend all that you earn. You should save something little every month towards your retirement saving. An employer must contribute towards the retirement of an individual. However, employer contributions are often not enough. You still need to make your own contributions.

Retirement Saving in Australia

In Australia, there are three pillars to retirement saving. First, there are compulsory employer contributions to super fund. Secondly, further contributions by an individual towards his retirement nest egg. Finally, there is a safety nest offered by the government.

Compulsory employer contributions are limited to the ordinary time earnings of an employee, which includes overtime pay, commissions, bonuses, wages and salaries. This is according to an amendment passed in 1 July 2000.

Safety of Superannuation Funds

With Australian Super Fund, your savings are safe. You will not lose any monies because the government highly regulates this fund. There are laws that govern superannuation in Australia. The Superannuation (Supervision) Act of 1993 governs this industry. This lays out the rules that industry players have to follow. The rules in question cover administration, investment and management of these funds. The issue of trustees is also fully covered.

Many regulatory bodies are in charge of overseeing superannuation funds. One of them is Superannuation Complaints Tribunal (SCT). This tribunal facilitates the resolution of complaints.

The Australian Tax Office makes sure that the different superannuation funds operate in total compliance to the different rules and regulations. Failure to follow the rules always leads to stiff penalties.

Superannuation Guarantee (SG)

An employer must contribute this amount to a designated super fund. For employees earning less than AUD 450 in a month, employers do not have to make this contribution. Superannuation guarantee does not also apply to employees who are below 18 years. Starting from 1 July 2018, SG rate will increase from 9.5% to 10%. From that date, it will increase by 0.5% each year until it reaches 12% on 1 July 2022.

Investment of the Superannuation Fund

The assets of the various superannuation funds in Australia exceed AUD two trillion. These funds have diversified their investment. The major types of assets are property and Australian shares.

The fund manager is required to seek the best rate of return when it comes to investing the monies of the fund. There must not be conflict of interest in relation to the investment process. The fund can borrow money to acquire an asset.

There are more than 500 Australian superannuation funds. An Australian super fund must be a member of The Association of Superannuation Funds of Australia.