So, you’re moving to Sydney, and you’ve heard about Australian Superannuation.
But you’re unsure what it is and how it will affect you. Read on to understand the basics of the Australian superannuation scheme.
Moving to Sydney to work and live is one of the most rewarding decisions a person can make. You will constantly meet people who initially came to Sydney on a working holiday visa a decade or more ago, and have now become Australian citizens because they’ve fallen in love with the city. Who knows, you may become one of them someday! You’ll soon find out that a major part of work in Sydney (and in Australia in general) is your superannuation, and how your visa affects this. You don’t need to worry though – Australian superannuation exists to help you financially, and it’s great!
What is an Australian Superannuation?
Superannuation, or ‘super’ as it is often referred to, is a scheme put in place by the government that allows Australians (and non-citizens who work in Australia) to accumulate savings that will provide them with income when they eventually retire. While obviously different in many respects, the Australian superannuation system is similar to the National Insurance Scheme in the United Kingdom, and the 401(k) plan in the United States, in that super is about saving for your future.
When you arrive in Sydney and begin to work, your employer will be legally obligated to make contributions to your super as well as paying your salary or wages. It doesn't matter if you are a part-time worker, a casual worker if you are an Australian citizen, or a non-resident – if you are over 18, and receive $450 or more in a month before tax for the work you do in Australia, your employer is typically required to contribute to your super. This contribution from your employer is known as a superannuation guarantee contribution or an SG contribution. Right now, Australian employers are required to make SG contributions that are at least 9.5% of your normal earnings.
Choosing a Superannuation Fund
Typically, you are able to choose the super fund that you would like your employer to pay the SG contributions into. This is because super funds vary, so you are entitled to decide what fund will best suit you. Your employer will generally give you a Superannuation Standard Choice Form to fill out, or you can fill one in yourself and give it to your employer to inform them of your choice. If you decide not to actively choose a fund, your employer will choose one for you.
There are hundreds of different super funds to choose from, so take some time to research which super fund is best for you – a good start is to read the super fund Product Disclosure Statement, available on their website.
Superannuation and Your Visa
If you are moving to Sydney, or are already here, then there are a few extra things to consider when it comes to your super. If you ever decide to return to your home country, you can claim your super as a Departing Australia Superannuation Payment (DASP). If you meet all the requirements, a DASP allows you to take the super you have accumulated home with you – in Australia, normally you can’t access your super until you turn 65 (this is known as your “preservation age”).
In December 2016, the government introduced a new DASP tax of 65% for working holiday makers (WHM). You are considered a WHM if you have a 417 visa, a 462 visa, or an associated bridging visa. However, the DASP tax treatment of a temporary resident who is not a WHM remains the same. You can examine the differing rates on the Australian Tax Office website. Qualifying for DASP is great because it allows you to take a nice little nest egg home after your time working in Sydney is over.
Working and living in Sydney is an incredibly fulfilling experience. Sure, there are a few new systems you must understand when you initially arrive here, and superannuation is one of them. However, you’ll never regret getting to know your super, because its sole purpose is to benefit you and your future. (If in any doubt, always consult a professional financial planner who can help you make informed decisions about your superannuation and savings).
Author Bio: Nationwide Super looks after the superannuation needs of people who work in and run small businesses right around Australia. They're a multi-industry superannuation fund that has been serving the Australian community since 1987, offering competitive products and highly-regarded personalized service. As a member-based business, their focus is not on generating profits for shareholders – but to return benefits to members for their retirement.
NSF Nominees Pty Limited ABN 29 053 228 667 AFSL 253129
Trustee of Nationwide Superannuation Fund (Nationwide Super) ABN 15 201 768 813
This document contains general information only and has been prepared without taking into account your financial objectives, situation, or needs. It may, therefore, not be right for you. Before you make any investment decision, we suggest you consult Nationwide Super’s Product Disclosure Statement available at nationwidesuper.com.au/PDS and/or seek licensed financial advice. As of the time of compilation, the information contained in this document is correct and any estimates, opinions, conclusions, or recommendations are reasonably held or made. Subsequent events may mean that the information becomes out-of-date and so, to the maximum extent permitted by law, we disclaim all liability and responsibility for any direct or indirect loss or damage which may be suffered by any recipient through relying on anything contained in or omitted from this document.
Disclosure of Material Connection: This is a “sponsored post.” The company who sponsored it compensated me via a cash payment, gift, or something else of value. Regardless, I only recommend products or services I use personally and believe will be good for my readers. I am disclosing this in accordance with the Federal Trade Commission’s 16 CFR, Part 255: “Guides Concerning the Use of Endorsements and Testimonials in Advertising.”
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Open Your Bank Account
In 5 minutes or less, you can open both a checking and savings account BEFORE you move to Australia. There are only 3 things you need to get started.
1. Your passport and visa details.
2. Know where you're going to live.
3. Be arriving within the next 3 months.
*This link will take you to Commonwealth Bank of Australia's special accounts for newly arriving expats and migrants. Commonwealth Bank is a sponsoring partner of Sydney Moving Guide.