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Planning for the SG rate rise

The steady climb in the Super Guarantee (SG) rate requires employees to contribute more money into their employees’ superannuation fund.

The SG rate has already increased to 9.25 per cent as of July 2013. The next increase to 9.5 per cent will come into play in July 2014. It is scheduled to increase further over the next coming years, eventually reaching the 12 per cent target.

It is also important that businesses are aware that the upper age limit for paying the SG rate for an employee was removed this year. This is to allow mature age workers to build up their retirement savings for a longer period of time.

The removal of the upper age limit means that employers must continue to pay eligible employees super if they are over 70 and continue to be employed by the business.

Posted on 23 January '14 by , under Super.

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Transition to retirement

The transition to retirement (TTR) strategy allows you to access some of your super while you continue to work.

You are able to use the TTR strategy if you are aged 55 to 60. You can use it to supplement your income if you reduce your work hours or boost your super and save on tax while you keep working full time.

  • Starting a TTR pension: To start your TTR pension, transfer some of your super to an account-based pension. You have to keep some money in your super account so that you can continue to receive your employer's compulsory contributions as well as any voluntary contributions you may be making.
  • Government benefits and TTR: The benefits you or your partner receive might be impacted if you choose to opt for this strategy. How and what exactly will change might become clearer upon discussing this with a Financial Information Service (FIS) officer.
  • Life insurance and TTR: In some cases, the life insurance cover you have with your super may stop or reduce if you start a TTR pension – check this before making any decisions or changes.

TTR can help ease your mind as you transition into retirement but it can be a bit complex. Before you choose whether you want to use TTR to reduce work hours or save on tax, or even if you want to use TTR altogether, you should figure out how this will impact all aspects of your finances.

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