What is a Super?
Superannuation, also known as ‘super’, is the amount of money set aside and saved by employees so that they can use it later in the long run, after their retirement. It is like a savings account where the more you deposit, the greater the outcome will be. It is the money that employers are legally required to put aside on behalf of their employees.
How does it work?
All companies, big or small have a department, which manages the super accounts of all employees. The heads of the organizations and companies ensure 9.5% of all employees income (including the bonuses, extra commissions and so on) is deposited in their respective super account. An employee himself can add money into his super account as well.
In case of people who are self-employed, they get to decide for themselves the amount of money they want to put aside as super.
The rule of Super is simple, the more you add into it the greater the investment will be for a secure future.
Importance of Super
- Retirement is a long phase.
As we all know how life after retirement becomes very monotonous and static, the same applies to the income of that individual. Saving money in a super account is an excellent decision that ensures you are well prepared for the post retirement phase which is bound to last longer. It is better to save up for unexpected things before time.
- Pension may not be enough.
The government provides pension to all its workers after retirement but this fixed amount is never enough to fulfil all the needs and necessities of the worker and his family. It is therefore essential to have a backup plan to save some extra cash.
- Long term planning is the ideal approach.
One should always think ahead of time and preplan things whenever possible. Investing in something, which might not show its effect initially, might be your greatest achievement in the long run. Since super serves the purpose of putting a certain amount of money aside, it is YOUR savings.
Consequences of Not Paying Your Super on Time
Super is an integral part of every organisation; therefore, it is essential for the employers to pay their employees super on time. It is the duty of every employee to carefully analyse and make sure his employer is paying the super timely. In case the employer fails to do so results in penalties, which are described below.
As we are aware of how 9.5% of the total income is added into the super account of every employee. This rate is for the ordinary earnings, in case you pay late, additional charges are applied on this, which includes an interest that is applied (10% on the outstanding amount) along with the employee admin fee ($20 quarterly). All businesses need to realise the importance of super and how failure to contribute might lead to a bad reputation in the marketplace.