Australian employers are required by law to deduct a pre-set percentage of each employee's earnings for the particular work period and deposit this money into a superannuation fund meant for the employee's retirement. The minimum rate of deduction is set by the government and can change in accordance with the prevailing economic situation in the country, among other factors.
The article below provides answers to two frequently asked questions about superannuation in Australia.
When Can One Access the Funds in a Superannuation Account?
The question of access to funds in a superannuation account is often the first question that a large number of people will ask. It is important to point out that the superannuation scheme is designed to help Australian citizens save and plan for their retirement. However, due to the unpredictable nature of life, there are situations under which one can access the funds in a superannuation account before he or she retires. The mentioned situations are catered for under the various types of benefits available with a superannuation account.
Preserved benefits are only available to the employee after retirement. The purpose of having preserved benefits under superannuation is to ensure that employees do not drain their retirement funds before their retirement age regardless of what happens later on in life.
In order to access funds in a superannuation account before retirement, some conditions have to be met. Termination of employment is a good example of one such condition. Such benefits are referred to as restricted non-preserved benefits. These benefits are often given on compassionate grounds.
Can Superannuation Benefits Be Assigned to a Third Party Beneficiary?
It is only expected that one would wonder what would happen to the funds in their superannuation account in the event that they don't make it to the retirement age. In the ideal situation, your chosen superannuation fund should allow you to nominate a beneficiary who would take control of the funds if the unfortunate happens.
There are two types of nominations used to assign superannuation benefits to third parties. Binding nominations require that the beneficiary is paid by the trustee while non-binding nominations can be equaled to recommendations. There is no guarantee that the beneficiary or beneficiaries named in a non-binding nomination will get what they deserve.
It is important to have an in-depth understanding of how superannuation works before you choose one fund over the other. For further questions on the same, contact your preferred accounting professional.