Retirement planning (especially in the construction and building sector) in Australia would not be complete without superannuation. It is essential to know how superannuation functions and how it helps in ensuring the financial security of the workers.
Explore the key details of superannuation to construction and building workers
What is superannuation?
Superannuation or super as it is often known is a government sponsored savings plan that is aimed at making people save towards their retirement. Work employers contribute to the funds on behalf of their workers, and the amount is normally a percentage of their wages or salary. Super funds can also be contributed by workers personally. These savings accumulate with time and can be availed upon the employees attaining the retirement age.
Key features of superannuation for construction workers
The nature of work may slightly vary in that workers in the construction and building sectors may have slightly different superannuation. These employees tend to work on a short term basis, switch jobs or even as subcontractors, and as such, super management may seem a little more complicated. Here’s what you need to know:
- Compulsory employer contributions: The construction industry has mandatory employer contributions that an employer is obliged by law to make an employee a minimum percentage of his earnings towards a super fund. This normally represents 10.5 percent of the salary or wages of the worker.
- Choice of super fund by employee: Employees have the option of selecting what super fund should their employer make a contribution to or they can select the default fund offered by their employer.
- Superannuation portability: The workers who often switch jobs can move their super among funds to have all their funds consolidated to make it easier to manage.
- Tax benefits: Super contributions attract a reduced rate of taxation as opposed to ordinary income and this could be advantageous to employees who intend to make maximum use of their retirement income.
Managing super for construction workers
To the construction workers, construction and building industry super is a must. The various construction workers have unique issues to deal with in that they may be contractors or may have to shift between employers, therefore it is good to know how to deal with superannuation in order to get the most out of it.
Efficient management of superannuation:
- Combine multiple super funds: It is common to find that many workers move between the funds of their accumulating super when they change their jobs. Super fund pooling will allow eliminating unwarranted expenses and simplify the process of managing the retirement savings.
- Check and update fund details regularly: Construction workers should also verify their superannuation account on a regular basis to make sure that their fund accounts and that the fund is performing well.
- Ensure proper documentation: It is a requirement to maintain appropriate records of the super contribution and fund details so as to be used in the future especially in the case of combining the funds or when seeking insurance services using the fund.
Why super is essential in the construction industry
Employees in the construction and building industries have very physical jobs and this may give rise to early retirement or shorten the working years. Furthermore, construction employees are exposed to job insecurity and high levels of transition in employment status and hence it is all the more necessary to handle superannuation effectively.
Super has several advantages to construction workers:
- Financial security in retirement: Super offers the employees the financial resources they need to sustain themselves once they retire.
- Additional insurance cover: In most of the super funds, there is death insurance, total and permanent disability (TPD) and income protection insurance and this is more advantageous to construction workers who are more prone to accidents at work.
- Tax savings: These contributions made towards superannuation attract a lower rate of tax thereby making potential savings to workers in the construction industry.
Finally
The knowledge and control of superannuation is very important to the construction and building industry worker. Through proactive management of their superannuation, construction workers will be able to control their financial future so that they will be comfortable on their retirement.