August 2009 - The Police Association Victoria
August 2009 - The Police Association Victoria
August 2009 - The Police Association Victoria
You also want an ePaper? Increase the reach of your titles
YUMPU automatically turns print PDFs into web optimized ePapers that Google loves.
THE POLICE ASSOCIATION<br />
16<br />
Why super is still super!<br />
A couple of years ago, when share markets were rising rapidly, superannuation<br />
may have seemed like a sure-fire way to achieve a comfortable retirement. But a<br />
second year of negative returns for the average super fund* may have some people<br />
questioning whether super is still such a good investment?<br />
A world leading retirement<br />
incomes system<br />
Although confidence in super<br />
may have been dented by the<br />
market downturn of the past year,<br />
commentators both in Australia<br />
and overseas, regard Australian<br />
superannuation as a world<br />
leading retirement incomes system.<br />
It is considered to be a robust,<br />
sufficiently liquid, prudent and<br />
well regulated system for funding<br />
peoples’ retirement.<br />
Tax benefits add up<br />
Superannuation’s tax advantages<br />
can make a significant difference<br />
to your retirement benefit compared<br />
to investing outside super. <strong>The</strong> tax<br />
advantages include:<br />
• Investment returns within super<br />
are taxed at up to 15%, unlike<br />
investment returns outside super<br />
which are taxed at your marginal<br />
tax rate of up to 46.5%.<br />
• You don’t pay income tax on<br />
amounts you salary sacrifice<br />
to super. Instead, these super<br />
contributions (within the<br />
contribution caps) are taxed at<br />
15%, which can be less than your<br />
marginal tax rate. In addition, you<br />
may pay a lower rate of income<br />
tax on your remaining salary if<br />
your salary sacrifice arrangement<br />
reduces your income to a lower<br />
income tax bracket.<br />
• Once you reach age 60 you pay<br />
no tax on any money you take out<br />
of super.<br />
• If you convert your super to a<br />
pension (eg. an ESSSuper Income<br />
Stream), no tax is paid on the<br />
investment earnings in your<br />
pension account.<br />
• You could receive up to $1,000<br />
free from the Federal Government.<br />
If you earn $31,920 or less in the<br />
<strong>2009</strong>/10 financial year, every<br />
dollar you personally contribute<br />
to super after-tax will be matched<br />
by the Government (up to a<br />
maximum of $1,000) – that’s a<br />
100% increase on your original<br />
contribution! People earning<br />
up to $61,920 in the <strong>2009</strong>/10<br />
financial year can also benefit.<br />
A regular form of saving<br />
History shows that people tend<br />
to invest back in growth assets after<br />
there is clear evidence that the<br />
markets have turned for the better.<br />
By the time a market rebound<br />
has been confirmed it is generally<br />
too late to take advantage of a<br />
significant part of the rebound.<br />
While it is impossible to pick the<br />
bottom of markets, a structured<br />
approach to gradually drip feeding<br />
funds into growth assets allows<br />
investors to average into the market<br />
and benefit from a market rebound<br />
when it comes through. This is<br />
known as ‘dollar cost averaging’.<br />
<strong>The</strong> compulsory nature of super<br />
means that many people will<br />
be taking advantage of dollar<br />
cost averaging through their<br />
regular employer contributions.<br />
Additional contributions made<br />
now may also mean you’re picking<br />
up quality assets at “bargainbasement”<br />
prices, so that when<br />
a turnaround comes your balance<br />
may recover more quickly.<br />
All in all, super remains one<br />
of the most tax-effective savings<br />
strategies for retirement available.<br />
* Defined benefit fund members are<br />
likely to be less concerned about<br />
negative returns than accumulation<br />
super fund members as most defined<br />
benefit accounts are not directly<br />
affected by investment performance.<br />
ESSSuper is the<br />
superannuation fund<br />
for current and former<br />
<strong>Victoria</strong>n emergency services<br />
employees, public sector<br />
employees and their spouses.<br />
For information about<br />
ESSSuper’s range of products<br />
and services go to www.<br />
esssuper.com.au or call<br />
1300 650 161.<br />
Get active in your <strong>Association</strong>, speak<br />
to your Delegate or go to the website<br />
www.tpav.org.au<br />
Get active!<br />
VIC T O RIA<br />
<strong>August</strong> <strong>2009</strong> <strong>The</strong> <strong>Police</strong> <strong>Association</strong> Journal<br />
www.tpav.org.au