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The three phases of super

Having a basic understanding the different phases that your superannuation goes through during your life can help when it comes to working out the tax treatment of an individual’s fund and any pension they take.

While not directly related, the overall investment strategy of a fund will also tend to change as the super transitions from one phase onto the next.

The lifecycle of superannuation can be divided into three phases; accumulation phase, transition to retirement phase and pension phase.

The accumulation phase is often the longest phase super goes through, running from when an individual starts work until they reach their 50s. The key during this phase, is to save and invest in as much as possible through contributions to super. Individuals can make concessional contributions, which are subject to an annual cap of $30,000 (or $35,000 for those over the age of 49) or non-concessional contributions, which are subject to an annual cap of $180,000.

Even though it is the shortest of the phases, the transition to retirement (TTR) phase is still quite important. A TTR typically starts when an individual turns 55, but individuals can also begin a TTR pension when they reach their preservation age. A TTR allows individuals to reduce their paid working hours (therefore, ‘transitioning into retirement’) and start taking money from their super.

The pension phase is when an individual has stopped accumulating and is now only withdrawing from their savings. The pension phase begins when an individual satisfies a ‘condition of release’. The main conditions of the release are:

Posted on 12 January '16 by , under Super.

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What to consider when consolidating your super

The ATO reported that 45% of working Australians were not aware that they had multiple super accounts in 2016. Having multiple super accounts is particularly common for individuals who have had more than one job. If this is you, it is important to identify and manage your super accounts because having more than one can be costly as a result of account fees from multiple funds.To combat this, you may want to consolidate your super, which moves all your super into one account. Not only does this save on fees, but it also makes your super easier to manage and keep track of.

Before consolidating your super, it is important to do the following:

Research your funds' policy
Compare your active super accounts so you can make the right choice about which one you should close. Things to assess include:

  • Exit fees
  • Insurance policies
  • Investment options
  • Ongoing service fees
  • Performance of the funds

Check employer contributions
Changing funds may affect how much your employer contributes, as some employers contribute more to certain funds. Check your current accounts to see if changing funds will affect this. Once you have selected a super fund, regardless of whether you choose a new super fund or one of your existing ones, provide your employer with the details they need to pay super into your selected account.

Gather the relevant information
When consolidating your super, you will need to have the following details ready:

  • Your tax file number.
  • Proof of identity. This could include your driver's license, birth certificate or passport.
  • Your fund's superannuation product identification number (SPIN).
  • Your fund's unique superannuation identifier (USI).
  • Details of your previous fund.

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