Superannuation is a tax effective means of putting aside money during your working life for use in retirement. Superannuation is a tax structure that is designed to fund a person's retirement. At AWS, a range of strategies can be formulated to find the most tax effective means of funding your post-working life, in order for you to reach your retirement goals.

A superannuation fund is a concessionally taxed investment trust. As a general rule, funds cannot be withdrawn until you are at least aged 55 and fully retired; this is known as 'preservation of funds'. There are two different types of funds, differing primarily in who runs them: an employer may run a company fund, an industry may fund an industry fund, a fund manager may run an industry fund or you may run your own fund.

An eligible Termination Payment (ETP) is a lump sum superannuation benefit, or similar payment, made to you as a member of a superannuation fund, Approved Deposit Fund (ADF) or a holder of a Retirement Savings Account (RSA). ETP's also include payments made to you buy an employer, if your employment is terminated.

Superannuation law is extremely complex. Throughout its history, legislation applicable to superannuation has changed on an annual basis and continues to change as governments provide greater incentives to contribute.

Why do you need superannuation?

Consider the following:

• We're living longer

According to the Australian Bureau of statistics (ABS), life expectancy of an individual age 50 today is 81 for males and 85 for females. That is a lot of retirement for most people.

• We're an ageing population

According to Treasury’s Intergenerational Report 2010, between now and 2050 the number of people aged 65 – 84 is expected to more than double.

Ensuring that you have adequate superannuation may be the difference between a comfortable retirement and one fraught with financial concerns. An AWS Financial Planner should be able to help you with all your superannuation questions.

As one of the government's preferred means of encouraging retirement savings, superannuation receives valuable tax advantages over other forms of investments. These tax advantages occur at three levels:

• Contributions made to superannuation may attract a tax deduction or tax offset;
• Earnings are subject to tax at a minimum rate of 15 per cent, and capital gains a maximum tax rate of 10 per cent (where the asset has been held for 12 months) or (15 per cent for less than 12 months); and
• Further concessions may be available when funds are used to commence an income stream.

Generally speaking, these tax concessions allow for greater capital accumulation over time utilising superannuation, as compared to other investment alternatives.

How much is enough?

According to the ASFA Retirement Standard figures (2012), for an Australian to have a comfortable lifestyle in retirement an annual income of $55,249 for couples and $40,407 for singles will be necessary. For a 'modest' retirement lifestyle, couples will require $31,675 per year and singles $21,930.

An AWS Financial Planner will be able to accurately assess your needs and plan to provide for them.

The material contained in this document is based on information received in good faith from sources within the market, and on our understanding of legislation and Government press releases at the date of publication, which are believed to be reliable and accurate.