If you have just started working under an employer in Australia, then you must be aware of the Australia Superannuation System which is considered as the most effective way for your retirement saving. Superannuation which in short-term can be referred as Super is a major retirement saving system that most people use in Australia. In simple terms, a small portion of your monthly pay check is invested in super funds by your employer as a saving for your retirement. On continuing to this post, you will be able to get all the information on what is superannuation and its rule changes from July 2024. Read the full post to learn in detail about the different types of super funds to invest in along with the withdrawal process during your retirement age, so that you cannot miss any details.
Superannuation Rule Changes from July 2024
Superannuation begins when you will start working and your employer will contribute a portion of your income into super funds that intends to work as your retirement savings. Your retirement savings will depend on how much you have contributed to super funds during your employment years. The higher you will contribute, the higher your retirement savings will be. However, there are caps on how much you are allowed to contribute before paying any tax. The contribution can be categorized into two types which are concessional contributions and non-concessional contributions. The former can be defined as the income made out of pre-tax while the contributions made as per post-tax income will be considered as non-concessional contributions. There are different types of super funds in which you can choose to invest that suits your situation and that intends to maximise your retirement savings.
If you are an employee, employer or self-employed citizen, then you are eligible to choose super funds. To know more about the eligibility of who can choose super funds, you can visit the official website of the Australia Taxation Office (ATO). As of July 2024, the ATO has implemented certain key changes in superannuation for the employees, employers and the self-employed citizens of Australia which we will discuss in this post. Starting from the July 1, 2024, there are key changes in superannuation guarantee rate, preservation age and rise in contribution caps. It is advised to all the worker whether they are employees working under an employer or self-employed to be aware of the recent changes in Australia Super as of July 2024. You can follow the step-by-step guide on the changes in Australis super mentioned below in this post.
Superannuation Rule Changes 2024 Quick Details
| Post title | Superannuation Rule Changes from July 2024 |
| Country | Australia |
| Department | Australia Taxation Office |
| Category | Finance |
| Applicable for | Employees, employers and self-employed citizens |
| Month | July |
| Year | 2024 |
| Official website | Ato.gov.au |
What are the Superannuation Rule Changes in July?
Starting from the July 1, 2024, the ATO has implemented three major changes in Australia Super such as rise in contribution caps, superannuation guarantee rate and preservation age. You can take a look at superannuation rule changes from July 2024 in the following points:
- Superannuation Guarantee Rate: Previously, the superannuation guarantee rate was 11%, which means an employer was required to contribute 11% of his/her employees’ income to superannuation fund. As of July 2024, the superannuation guaranteed rate is increased to 11.5% which means, an employer will now be required to contribute an additional amount of his/her employees’ income to the superannuation fund in order to be eligible for the retirement funds. In addition to it, as per the current schedule of legislated increase, the superannuation guarantee income is expected to rise to 12% on July 1, 2025.
- Rise in Contribution Cap: Previously, for over a period from July 2021 to June 2024, the contribution cap for the Australia super was set at $27,500. As per the new changes from July 2024, the contribution cap is increased to $30,000 starting from the July 1, 2024. As a result, now you are allowed to contribute more to super funds as per your pre-tax income. On the other side, the non-concessional contribution limit was set at $110,000 for over a period from July 2021 to June 2024. Starting from July 1, the new non-concessional contribution rate is increased to $120,000.
- Preservation Age: To get the retirement benefits after contributing to super funds in your employment years, it is required for a citizen to reach his/her preservation age. As of July 2024, the preservation age is increased to 60 for those who have are not 60 years old yet.
What are the Different Types of Super Funds?
If you are an employee, contractor or a self-employed citizen, then you are allowed to choose in which super fund you want your employer to invest your superannuation contribution which also includes your superannuation guarantee income. There are many types of super funds that you can choose which suits your situation and is helpful in maximising your retirement savings. I have mentioned some of the super funds in the points listed below:
- Industry funds
- Retail funds
- Public sector funds
- Corporate funds
- Self-managed Super Funds (SMSFs)
Superannuation in Australia- Withdrawals in Retirement
When you contribute to super funds, you are saving for your retirement. However, you must qualify all the conditions of release of your super. For instance, you must reach preservation age which. The preservation age is the age at which you are allowed to release your super when you retire. You can check the following points for better understanding on when can you withdraw your retirement savings:
- You must have turned 65 (even if you have not retired)
- You must reach preservation age
- You must satisfy an early access requirement
- Citizens who are born after July 1, 2024, their preservation age is 60.
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