AGEST -
Australian Government Employees Superannuation Trust
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About superSuperannuation is simply a way for saving for your retirement. It is an attractive long-term investment that helps you save for retirement in a tax effective way. Superannuation contributions compound with investment earnings over time into larger sums that are available in retirement.
When you retire, your superannuation might be paid as a lump sum or as a superannuation pension. For most people superannuation is their second largest asset, behind the family home.
The simplest way to think of super is like a bank account where -
The amount in your account, after accounting for all the contributions, taxes, fees and investment earnings, is what you have for retirement - along with any other assets you have built along the way.
Below is a brief history of superannuation in Australia. Superannuation first started in Australia around 1850. At this time some banks, large private companies and governments started paying private pensions to their senior, long serving employees. Other employees had to rely on their personal savings to fund their retirement. If there were no personal savings they had to satisfy the strict qualifying tests for age pensions provided by some state governments in the 1890s and the Commonwealth government from 1909. For the first 130 years of superannuation, there was little change in the way it operated. In the 1950s superannuation spread to more of the workforce, but it continued to be provided mainly to permanent staff, and was seen more as a reward for long and faithful service. Private sector employers began to set up their own company-administered funds (corporate funds) or paid contributions into a life office administered fund (master trust). During the 1960s superannuation became more popular when the tax treatment of contributions to funds became more generous for the self-employed. However, during this period concerns grew about the costs of many of the funds, how they operated and the abuse of favoured tax treatment in the interest of the fund sponsors rather than the members. There was also concern that despite considerable tax incentives large sectors of the workforce still did not receive super at all. A series of government inquiries into these issues in the 1960s, 1970s and 1980s set the scene for superannuation in Australia to change. The most significant change was the inclusion of compulsory super in industrial awards in 1986. The government also introduced guidelines requiring these contributions to be fully vested in the member and preserved in a super fund until retirement. In 1989, the government stated its aim of maintaining the full rate pension at 25% of average wages, rejecting a higher percentage as too expensive. The government also recognised the need for Australians to start making provisions for their own retirement by contributing to superannuation. As Australia had an increasingly large ageing population that would need to be supported in retirement, award super would not have grown fast enough in terms of contribution levels and coverage. The government therefore introduced compulsory super for all employees from 1 July 1992. The government uses both encouragement and compulsion to ensure that those in the workforce save for their retirement. The objective is to improve total retirement income in a way that taxpayers can afford. Source: The Association Of Super Funds of Australia (ASFA). The peak industry body for the super industry.
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