Top 10 benefits of superannuation

Superannuation does more than just fund your retirement. It's also a handy financial tool that offers an array of benefits like tax advantages, growth opportunity and even cheap insurance cover. So what are the major superannuation benefits? Let’s find out!

Tax advantages

The tax advantages of superannuation are numerous. For one, contributions of up to $27,500 (including employer contributions and voluntary contributions) are taxed at only 15%, which is much lower than most Aussies’ marginal tax rate. Furthermore, anything you earn as the fund grows is also only taxed at 15%, again, quite lower than what you’d pay on any other capital gains. Finally, if you withdraw your super after age 60, it’s generally tax free. 

Compound growth

Just like a well-tended garden, your investments in the stock market can blossom into substantial wealth thanks to the magic of compound growth. When you reinvest dividends—turning your earnings back into more shares—alongside the natural appreciation of your shares, your investment’s potential for growth compounds. Each reinvestment and increase in share value builds a stronger foundation for future gains. 

Affordable insurance

Because of economies of scale, superannuation companies can score good deals on life, disability and income protection insurance. What's more, the premiums for these insurance policies are often deducted directly from your super contributions, rather than impacting your take-home pay. 

Diversification

Most investment options offered by your super fund will invest your money across different asset classes, giving you diversity in your portfolio. This type of diversity, which reduces the risk of investing too heavily in any one type of investment, can be difficult to achieve as a lone investor. 

Free advice

Many of the larger funds offer free financial advice for their members, helping with anything from investment options and tax implications to insurance cover and personal contributions. This can be a cost-effective way to navigate the complexities of superannuation and make informed decisions about your future.

It’s ‘set and forget’

Superannuation offers the ultimate 'set and forget' convenience. Once you've selected your investment options and contribution preferences, your super fund takes over, actively managing your investments so you don't have to. Your contributions are seamlessly deducted from your paycheck and expertly invested according to your chosen strategy—whether it's aiming for aggressive growth or opting for conservative stability. 

Government co-contributions

If you’re a low or middle-income earner and make personal (after-tax) contributions to your super fund, the government will match a portion of your contributions, up to $500, provided you meet certain eligibility criteria.

It can help you buy your first home

With the First Home Super Saver Scheme (FHSSS), you have the opportunity to contribute up to $50,000 to your super fund towards your first home deposit. These contributions receive concessional tax treatment, making it easier for you to save towards your first home.

Automatic savings 

With your employer contributions going straight into your super account, you're effortlessly putting money aside for the future without the temptation of spending it beforehand. Other than choosing your fund and investment options, it’s a relatively hands-off approach to saving. 

Flexibility in contributions

While having over 10% of your salary automatically directed into your super sets a solid foundation for retirement, you're not limited to just that. You have the flexibility to contribute more if you wish, giving you greater control over your financial future. Currently you can contribute up to $27,500 as concessional contributions (including your employer contributions) and up to $110,000 as non-concessional contributions.

Bottom line

As you can see there are quite a few benefits to superannuation, apart from providing you with a secure retirement. If you haven’t already, we suggest digging into our superannuation guides hub to learn more about this one-of-a-kind investment, or or start by comparing super fund options.