Making sure you are covered for when you finish working later in life is not only a sound idea financially; it's also a good idea in terms of setting your mind at ease. Whether you're the type of person who stays awake worrying at night or not, it's never too early to think about your pension or super.
Australia's public pension system consists of two parts: the employer-based Superannuation Guarantee, and a means-tested benefit, the age pension.
Superannuation
Throughout your working life, superannuation plans will be funded by your employer at a rate of nine per cent of your ordinary time earnings, filling up this compulsory retirement fund as time goes on. Introduced during the early 1990s, the superannuation scheme is viewed upon with envy by many other industrialised nations.
In recent years, changes mean you can now choose which super plan best suits you. Sometimes this money is deducted from a remuneration package, sometimes not, if an additional payment is made on top of your salary. Generally, superannuation supplements the age pension provided by the government in order to set you up with additional income in retirement. As of 2007, super funding paid from a taxed fund will be tax-free for anyone more than 60 years old.
You can draw upon your super at 55 if you no longer work or 65 whether working or not. For information on planning for retirement in general, visit the About Seniors website.
Government pensions
Government pensions in Australia are provided through Centrelink. They are income and asset tested. They start at the age of 65 for both men and women - if they are born after 1949.
For the asset test, if a single person has less than $157,000, and a couple less than $223,000, they will get the full government pension. A total of $1.50 is deducted every fortnight for each $1,000 above the aforementioned figures. If a single person's income is below $124 per fortnight, or $220 for couples, they qualify for the full age pension. Income above this means 40 cents less per dollar, or 20 cents less for couples. However, the test will undergo some changes in September 2007. Visit the Centrelink website for all the updated changes.
The current government pension payable is currently $525.10 per fortnight for single people, and around $438.50 for couples.
