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Changes to super

7/9/2014

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Under a bill passed in the Senate with Government amendments, the SG rate will remain at 9.5 per cent for seven years, rising to 10 per cent from July 2021 and then progressively rising to 12 per cent by July 2025.

One way you can try to keep your retirement savings on track despite the delay in increasing the SG rate is to make salary-sacrificed super contributions.  This is provided you can afford it and have the savings discipline to instigate a salary-sacrificing strategy.

Of course, making a decision to make salary-sacrificed contributions can be difficult, depending on personal circumstances.

And those of us facing the costs of mortgage repayments, education of their children and general cost-of-living pressures have to decide where saving for retirement fits in with their long list of financial priorities. It can be a tough call.

There are a range of benefits from salary-sacrificing into super, depending upon your circumstances. These include contributions being taxed at 15 per cent rather than marginal tax rates payable on salaries (an advantage for most taxpayers) and earnings within the super fund being concessionally taxed.

It would be timely to gather as much information about salary-sacrificed contributions and to possibly seek guidance from a financial planner.

In short, the pause in the planned increases in the SG rate places more of the initiative on individuals to take decisive action to better prepare for retirement.

To find out more about salary-sacrificed contributions speak to Southern Advisory today.

Source: www.vanguardinvestments.com.au

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