Superannuation is probably the most popular method of saving for retirement among Australians. Also commonly called super, it has not only become a major source of retirement income, but has also become an avenue for investment and linked with life insurance policies.

In a nutshell, superannuation is like your savings account in a financial institution such as a bank, except that you cannot access it unless you meet some certain requirements.

Most basically, you can access your superannuation when you reach the preservation age which is between 55 and 60, at which time you can opt to receive it as a lump sum payment or as an income stream.

However, there are special cases wherein you can access your super earlier before the preservation age, such as extreme financial hardship, permanent disability, or under compassionate grounds which includes the need to pay for loan and mortgage repayments, and medical assistance.

Responsibilities of the Employer

Since superannuation is meant to be the source of income during a person’s retirement, it is important to boost it so that you can have the retirement you want.

But what if you are the employer? What are the things or responsibilities you have to do in regards to your employees’ super fund?

Suggest a choice of super fund to your employees.

A lot of employees are allowed to choose the super you pay your funds to. You have to identify which employees are eligible; and when they do, you have to provide a Standard choice form to those eligible employees. Then you can set up a default fund or carry out what your employees’ choice is.

Make a payment to your super fund.

After offering your employees a choice of their super fund, you must pay your contributions to a complying super fund or a Retirement Savings Fund or RSA. You can make sure if the super fund meets the requirements by checking the online Super Fund Look-up tool, or confirming from the fund’s trustee.

If your company has less than 20 employees, you might be eligible to use the free Small Business Superannuation Clearing House service provided by Medicare Australia.

Include Tax File Numbers

Including the Tax File Numbers of your new employees on their super fund after they have completed a Tax file number declaration is required. There are certain penalties incurred to you if there is failure of compliance.

Offer salary sacrifice

Aside from your contributions as an employer, you can also offer your employees to make salary sacrifice which can boost their superannuation funds.

Paying Your Employees’ Super Fund

As an employer, the minimum super contribution you have to make into your eligible employees’ super fund is 9% of their ordinary time earnings. You have to make payments four times a year, 28 days after the end of each quarter.

Employees who are eligible to have a super fund are those who are between 18 and 69, in which you have to make before taxes contributions of $450 or more in one month. You should also note that if your employee is under 18, they should be working at least 30 hours a week in order to be eligible.

If you want to claim tax deductions for your super contributions, paying on time will make you eligible for such deductions.

Providing Life Insurance for Your Employees

Retaining the people who prove to be an asset to your company can be difficult if they know that there are no extra benefits for them, or if they are unmotivated.

However, one strategy to keeping key people in your company is by providing life insurance for your members. With life insurance, it will boost their morale knowing that whatever happens to them, the company has prepared something for such cases.

Life insurance can be purchased with your group super fund, or as a standalone benefit. Life insurance as group insurance is categorised and available into three types:

• Group Life (Death Cover Only)

This life insurance product pays you a lump sum if your employee dies or is diagnosed with a terminal illness.

• Group Salary Continuance Cover

If you opt for this cover, you receive a monthly benefit of up to a maximum benefit of 75% in the event your employee is unable to work because of an illness or accident.

• Group Total and Permanent disability (TPD)

This type of life insurance pays you a lump sum benefit if an employee is diagnosed with a total and permanent disability.

These life insurance policies are ideal for companies which have around 75 employees and have corporate or industry super funds. Moreover, if you contribute to a default super fund for your employees, you are required to meet a certain amount of death cover in which you have to pay a minimum premium of $0.50 every week to members who are under 56. Another option to meet the death cover requirement is by providing a minimum age-based cover as shown on the table below:

Taking care of your employees by paying your employer contributions to your employees’ super and providing them with the right life insurance cover can be more of a benefit than loss to you. The premiums and contributions you are paying now can have a big effect on the future of your company.