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Super Essentials for the Self-Employed

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 Super Essentials for
 the Self-Employed
 Do you actually need super-                       nine per cent of an employee’s salary that       planners, industry funds use their earnings
 annuation? And if so, do you                      employers are required to contribute to an       to boost members’ account balances.
                                                   employee’s super account is the first element.      Industry funds also work hard to keep
 know how to choose your own                       If you don’t currently pay at least this         fees low, so that as much money as possible
 superannuation fund? HESTA                        percentage of your earnings into your own        stays where it should: in members’ accounts.
 explains how you can plan now                     super account, you’re probably selling           They also strive to provide features that
 to enjoy your retirement later.                   yourself short. And you may not have enough      benefit as many members as possible, such
                                                   savings to enjoy your retirement.                as great value income protection and total
                                                       The second aspect of retirement income       and permanent disablement and death
                                                   is the Age Pension, which aims to provide a      insurance.
                                                   safety net for retirees. Currently, the age         As the name suggests, industry funds
   How is superannuation                           pension pays $24,746 per year for a couple,      were originally set up to support specific
   different from other savings?                   and $14,814 per year for a single. Yet a         industries. Although any person can now join
   •	 It’s usually linked directly to your         study by Westpac and the Association of          most industry funds, these funds remain
      work.                                        Superannuation Funds Australia in                heavily involved in, and supportive of, the
   •	 Superannuation funds that hold and           December 2008 estimated that to live             industries they were set up to serve. HESTA
      invest your money are regulated by           comfortably in retirement, the average           Super Fund is your industry fund for the
      the government and subject to rules          couple would need $50,414 per year. The          health and community services sector.
      and laws.                                    average single would need $37,621.
   •	 Super is taxed differently from other                                                         Selecting super investments
                                                   Obviously, you’ll need super to enjoy your
      money you earn or invest — you pay                                                            Many superannuation funds offer members
                                                   retirement. Even if you do pay yourself an
      just 15 per cent tax on concessional                                                          a choice of investment options, each using
                                                   equivalent of the SG super that salaried
      super contributions (that is, your first                                                      its own blend of assets to pursue specific
                                                   employees receive, you’ll probably also need
      $25,000 in super contributions per                                                            performance objectives. Investment choice
                                                   to save extra for your retirement.
      year, or $50,000 if you’re over fifty);                                                       gives you more control over how your money
                                                       The third aspect of retirement income is
      for sole traders and the self-employed,                                                       is invested.
                                                   the extra super contributions you make
      contributions may be tax deductible.                                                              Each asset class has its own level of
                                                   towards your retirement savings. By making
   •	 Most of your super can’t be accessed                                                          expected growth, or earnings potential.
                                                   regular contributions that ensure your
      before you retire.                                                                            Generally, the greater the earnings potential,
                                                   savings are on par with those of salaried
                                                                                                    the greater the degree of risk inherent in that
                                                   employees, and boosting those savings with
                                                                                                    asset class.
                                                   an additional contribution strategy, you can
 Superannuation is a tax-effective, long-term                                                           To ensure that your investment choice
                                                   build enough super to really enjoy your
 savings strategy: you invest money throughout                                                      targets your needs and goals for the future,
                                                   retirement.
 your working life, via a super fund, to                                                            consider speaking with a financial adviser.
 generate an income when you retire.               Finding the right fund                           HESTA members can obtain free personal
    As a self-employed person, sole trader or      Australians can choose the fund in which         advice about their super from our expert
 business partner, you may not be required         they want to invest their super. There are two   team.
 to make regular contributions to your own         basic kinds of super funds: industry funds       How to boost your super
 super. But if you don’t contribute now, you       and retail funds.
                                                                                                    Your savings strategy can include a
 may find it difficult to enjoy your retirement.      Industry funds are profit-for-members
                                                                                                    combination of your own contributions and
                                                   funds. They have no shareholders seeking
 Do you need super?                                dividends, only members, and they don’t pay
                                                                                                    salary sacrificing into your super account.
 Yes, you do. The Australian retirement            commissions to financial planners. So while      Making personal super contributions
 income system involves three elements.            retail funds pay dividends to their company’s    Your super fund may accept personal after-
    Superannuation Guarantee (SG) – the            owners, and commissions to financial             tax contributions from you and let you pay


 14           Journal of the Australian Asso ciation of M assage Therapists
                                                                                                                     Massage
                                                                                                                             Therapists

                                                                                                 Checklist for choosing a fund
                                                                                                 This checklist will help you compile
                                                                                                 important details about your fund and
                                                                                                 make a fair comparison between funds.
using payroll deduction, direct debit, BPay      Super contributions are tax deductible          Investment performance
or personal cheque.                                                                              •	 One-year return on default fund
                                                 Your super contributions are fully tax
   Depending on your annual income, your         deductible from your business income            •	 Five-year average annual return on
after-tax contributions may attract a                                                               default fund
                                                 provided you’re substantially self-employed
government co-contribution – a payment                                                           •	 10-year average annual return on
                                                 (that is, less than 10 per cent of your total
                                                                                                    default fund.
made by the government to help eligible          income is earned as an employee). From
people boost their super balances.                                                               Note: the default fund is the fund in
                                                 a business perspective, there’s no limit
                                                                                                 which most members’ investments are
Making a salary sacrifice                        to the tax-deductible amount you can
                                                                                                 held, unless they choose another option.
                                                 contribute to your super – all contributions
You can make a salary sacrifice (also called                                                     Fees and costs
                                                 are deductible.
salary packaging) to super. Through this                                                         •	 Entry fee (should be zero)
                                                    However, as a super fund member, you
arrangement, you pay a portion of your pre-                                                      •	 Exit fee (should be zero)
                                                 can only have a limited amount contributed
tax salary into your super account.                                                              •	 Contribution fee (should be zero)
                                                 to your super account at the concessional
   Before you enter into a salary sacrifice                                                      •	 Fee for switching investment
                                                 tax rate of 15 per cent. You’ll pay an
arrangement, it’s a good idea to contact your                                                       options (should be zero)
                                                 additional 31.5 per cent tax on super
financial adviser and accountant to ensure                                                       •	 Adviser service fee
                                                 contributions exceeding $25,000 a year
that arrangement will benefit you.                                                               •	 Administration fees
                                                 unless you’re over fifty, in which case you
What else affects your super                     can contribute $50,000 before you’ll pay the    •	 Investment management fee
balance?                                         extra tax.                                      •	 The percentage difference between
                                                                                                    Buy and Sell unit prices (should be
A number of variables can make a material
                                                 Your super plan may be different                   zero).
difference to your final super balance. The
                                                 HESTA offers a tailored Personal Super Plan     Features
Australian Securities and Investments
                                                 for people who are self-employed, sole          •	 All profits go to members
Commission (ASIC) consumer website,
                                                 traders or operate a business partnership.      •	 Online access to your account
FIDO, offers an interactive model that can
                                                 This plan offers the same benefits as our       •	 Commissions paid to financial
help you work out the long-term effects of
                                                 Industry Super Plan, and although a                advisers (should be zero)
different factors on your super, including:
                                                 minimum $1,000 balance is needed, regular       •	 Supports your industry
•	 common fees and charges
                                                 contributions are not required.                 •	 Member representation on the Board
•	 making        extra    contributions     to
   superannuation                                Your personal super plan                        •	 A comprehensive range of
•	 receiving the government co-contribution                                                         investment options
                                                 Self-employed professionals, sole traders,
   (if eligible)                                                                                 •	 Provides education and advice
                                                 and those in business partnerships are
•	 decreasing or stopping superannuation                                                            services at your workplace.
                                                 welcome to join HESTA Super Fund.
   contributions due to absences from the             HESTA’s Personal Super Plan offers all     Insurance
   paid workforce                                the benefits of its Industry Super Plan,        •	 Low-cost disablement and death cover
•	 switching your investment strategy or         including the same broad range of investment    •	 Low-cost income protection cover
   changing funds.                               options, the same affordable fee structure,     •	 Nature and extent of coverage.
    Try these tools, and see how your future’s   access to support and your accounts over        Portability
looking: visit FIDO at www.fido.gov.au.          the phone and online, free personal advice      •	 The option to take your super with
Super for the self-employed                      about super, and access to great-value             you when you change jobs or move
                                                 Income Protection, Death and Disablement           interstate.
If you’re self-employed, a sole trader or you
                                                 Cover.                                          Access to extra services
operate a business partnership, your super
                                                      The application process is simple – just   •	 Low-cost banking products
setup may be slightly different from that of
                                                 fill in the form in the Product Disclosure      •	 Commission-free financial planning
someone who works as an employee.
                                                 Statement. You’ll have a 14-day cooling off        services
Super is not compulsory                          period to change your mind about the            •	 Commission-free investment funds
Unlike an employer with staff, you aren’t        application, and once your account is           •	 Income stream options for your
required by law to make regular super            opened, you’ll need to maintain an account         retirement.
payments to your super account.                  balance of $1,000 or more.


                                                                                                                 Spring 2009             15
Feature



                                                               Books & DVD Reviews
                                                               Three useful new books for massage therapists.
    You’ll pay no entry or exit fees or                        Positional Release
commissions, and you can make                                  Manual Therapies with Diana Hayes
contributions to your super whenever you                       MMV11 Real Bodywork
like, subject to the government contribution                   Reviewed by Niki Ruane, WA Divisional
regulations.                                                   Committee.
    For more information on joining                            Diana Hayes has created an inspiring
HESTA’s Personal Super Plan, visit
                                                               educational DVD on Positional Release (PI).
www.hesta.com.au and select ‘Join HESTA’,
                                                                  According to the creators, PI is similar to
or free call 1800 813 327.
                                                               Orthobionomy, Strain – Counter Strain and
Disclaimer                                                     Neuromuscular Re-education as the
Information issued by H.E.S.T. Australia Limited ABN 66        technique works with the body’s nervous
006 818 695 AFSL No. 235249 regarding HESTA Super
Fund ABN 64 971 749 321. This information has been             system to remind and assist the muscles to
carefully compiled from sources we consider to be              relax.
reliable. However, it is only current at the time of writing
and may not be accurate in all instances. It is of a general      Diana opens the DVD with a 20-minute
nature. It does not take into account your objectives,         comprehensive introduction into positional
financial situation or specific needs so you should look at
your own financial position and requirements before            release techniques and how they work. The
making a decision. You may wish to consult an adviser          techniques themselves consist of placing
when doing this. Please note that investments can go up
and down. Past performance is not a reliable indicator of      the affected muscles or muscle groups into
future performance. Consider our Product Disclosure
Statement before making a decision about HESTA – free
                                                               very precise positioning, and then using
call 1800 813 327 or visit www.hesta.com.au for a              what Diana calls a ‘monitor point’ or painful
copy.
                                                               point release to effortlessly soften and relax   work is positioned in such a way that you get
                                                               and re-educate the muscle. She indicates         the best possible view of what she is
                                                               that the muscle and monitor point needs to       demonstrating. The only thing that amused
                                                               be held in position for about 60-90 seconds      me was the ‘dynamic effects’ of a loud and
                                                               to get full release.                             slightly out of place SWISH used to separate
                                                                  Diana then works through a basic              the demonstrations of the individual
                                                               evaluation process with a client on the DVD.     muscles.
                                                               This leads through to the step by step               The final integration session at the end of
                                                               process of looking at individual muscles         the DVD helps to put it all into place and
                                                               within different regions. She covers the         potential practice.
                                                               regions of the neck, shoulder and arm,               Overall, I think that anyone interested in
                                                               spine, pelvis and leg. Diana’s explanations      the technique, or teachers delivering the
                                                               of the techniques for each muscle are            techniques within courses would benefit
                                                               extremely clear and concise. The camera          from having this DVD in their collection.




16              Jou rna l of t h e Au st r a l ia n As s o c iat i on of M as s ag e Th e r a pi sts

				
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Description: Super Essentials for the Self-Employed