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<p class="greenHeader">Super sprint turns into super marathon</p><p><em>Provided by Mercer<br />22/6/09</em></p><table width="100%" cellpadding=0 cellspacing=0 border=0><tr valign=top><td width="100%"><p><p><strong>Superannuation changes made in the recent federal budget have confirmed the need for a superannuation marathon to retirement rather than a sprint. However, there are some head-start opportunities to be had before July 1, says consulting, outsourcing, and investments firm, Mercer.</strong> </p><p>Changes to rules affecting superannuation contributions mean the days of not thinking about retirement until you’re 50 and just topping up your super in your last few working years are gone, according to Mercer’s Financial Advice Leader, Scott Walters. </p><p>“Sprinting at the end of your working career, in terms of super contributions, will no longer be an option for many, and younger people in particular should consider taking advantage of the next couple of weeks to get a serious head-start on saving for their retirement,” he said. </p><p>Changes in the federal budget to the government superannuation co-contribution means people who contribute extra money to superannuation before June 30 could receive up to $500 extra from the Government into their superannuation savings.  </p><p>As of July 1 government co-contributions will drop from the current  maximum of $1.50 for every dollar contributed after-tax (capped at $1,500), to a maximum of $1.00 for every dollar contributed, capped at $1,000. For the 2008/09 income year, those earning $30,342 or less will receive the maximum co-contribution, however, the co-contribution cuts out altogether when you earn $60,342 or more.</p><p>“So if you – or your children and/or partner – earn less than $60,000 you need to act now to benefit from the extra government co-contribution,” said Mr Walters. </p><p>“While retirement may be a long way off for Gen Ys, they are also the group that has the biggest opportunity to benefit from the maximum government co-contributions.  Gen Y in particular should get the message loud and clear that saving for retirement requires a marathon effort, and any successful marathon runner knows you don’t wait until the last minute to start training.</p><p>“With the benefit of compound growth, an extra $500 in your super account now could equate to a lot more money to retire on, particularly for younger workers who are still 20 or more years off retirement,” said Mr Walters. <br /></p><p /><h2>Checklist to get a head-shart in super marathon - Before July 1</h2><p /><ul><li><strong>Seek financial advice</strong> - Your future wealth strategy may be impacted by the budget changes and may need updating in light of the new rules. It’s important to know if any changes have been made to the proposals since Budget night and getting financial advice can help you make sense of them in the context of your current situation and your needs in retirement. Getting advice will also help you with the following: </li><li>If you – or your children and/or partner – earn less than $60,342, <strong>consider making a voluntary after-tax superannuation contribution before 30 June 2009</strong> to make the most of the government co-contribution, before it is reduced on 1 July 2009</li><li><strong>Review your contribution strategy </strong>- changes to the concessional cap from 1 July 2009 means making large lump-sum before-tax contributions in the lead up to retirement may no longer be the best, or even viable, option. This change has the potential to significantly affect people nearing retirement and planning to boost their super in the few years before they retire.</li><li>If you have more time before your retirement, you may wish to review your broader contribution strategy and consider <strong>boosting your contributions each year over a longer period rather than playing catch up later</strong>. This strategy will also allow you to take advantage of the compounding effect of your contributions over a longer time frame.</li><li><strong>Remember the non-concessional (after-tax) contribution cap is unchanged</strong>, which means you can still make up to $150,000 in after-tax contributions to your super on a yearly basis.</li><li><strong>Keep track of your concessional contributions </strong>- It’s now easier to unintentionally exceed the concessional contributions cap – it’s important to keep track of both employer and your own before-tax contributions. If the cap is exceeded, any contributions above the cap will be taxed at a rate of 31.5% on top of the normal 15% contribution tax (which adds up to 46.5% tax on any contributions that exceed the cap).</li><li><strong>Clean up your superannuation accounts </strong>- Under the recent Budget amendments to the treatment of lost super, superannuation providers will be required to transfer lost super accounts which have been inactive for five years, or with balances of less than $200, to unclaimed monies.</li></ul><p /><p><br /></p><p><table width="100%" cellpadding="0" cellspacing="0" border="0">
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