12th Nov 2009 by Tobias John Sterling
Superannuation is a relatively simple system for attempting to ensure that people have enough money in retirement to live on. The way is works is this: during a person's working life, their employer(s) is/are compelled to deduct 9% of the person's pre-tax earnings and pay the money into the person's designated superannuation fund, making deposits at least once every 3 months. These contributions are concessionally taxed; the rate is a flat 15% rather than at the person's marginal tax rate, which could be much higher. The superannuation fund then invests the money on the person's behalf, seeking to earn an investment return and increase the size of each member's holdings. It's possible to make voluntary contributions to one's superannuation, and these are also taxed at 15% (they have the additional benefit of reducing your taxable income). Superannuation can't be touched until you reach preservation age (from 55-60, depending on your birth year) and retire, or reach 65 whether you're working or not.
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