Super for the Self-Employed
July 26, 2022

What is salary sacrifice into Super and how does it benefit you?

Super for the Self-Employed: Planning for Your Retirement

When you’re self-employed, there’s no law saying you have to have a superannuation account. Nor do you have anyone make contributions for you. You’re the boss, fully in control of your personal finances. But have you thought about your retirement and what happens when you’re no longer working?

Many self-employed workers assume they cannot get, or do not even need, a super fund.  But the truth is every working person in the country needs a form of retirement savings. No matter whether you have a boss or you are the boss, you can get a super fund.

And as a self-employed person, you’re fortunate enough to enjoy several added tax benefits when making your own super contributions. Keep reading to learn the what, whys and hows for self-employed super!

young professional

Where can I ‘get’ super for self-employed?

Almost any bank or superannuation company that opens super funds for employees can open a super fund for you. All regular employees choose their super fund, as you do too. Alternatively you may choose to create and manage your own super fund. A self-managed super fund (SMSF) is a popular option for the self-employed, but it can be a hefty investment to set up.

When researching retail or industry super funds, it’s important to choose the right fund for you. You will need to consider administrative fees and decide whether to set up life insurance through your super fund. You may also like to examine the types of investments each super fund makes and assess whether that’s where you’d like your money to go.

If you choose to set up an SMSF, you will have greater control over the investments that you make and how your super is distributed. But it will take an added effort on your part and you’ll need to manage your fund and your investments yourself, with the help of a financial adviser.

How do I contribute to my fund?

As a self-employed worker, you have no legal responsibility to make regular contributions to your super fund as employers do for their employees.

To ensure you have the right amount of money to retire, talk to a financial adviser or representative of your chosen super fund to make a contribution plan. It may be as simple as deciding how much super you’d like to retire with, and dividing that by the amount of months left before your ideal retirement age. You can then set up regular monthly deposits.

You may be able to automate this with your chosen fund provider, or you else will need to remember to make a direct deposit each month. Make sure you keep a record of your contributions as they are tax deductible.

What are the benefits of having a super fund as a self-employed person?

We’re glad you asked! As the Australian Government wants you to pay your super, they’ve created several super benefits for self-employed workers.

Super is an investment in your own future, so those classified as substantially self-employed (receive less than 10% of their yearly income from an employer) can claim a full tax deduction on whatever contributions they make up to the yearly limit, which ASIC currently sets at $30,000 for people under the age of 50.

Depending on how much money you take home each financial year, you could also receive co-contributions from the government into your super account. Check out the Australian Securities and Investments Commission’s MoneySmart website (ASIC) for more information.

How else can I benefit from super?

Apart from super being one of the best ways to consolidate your financial future, you can also buy Life Insurance and Income Protection through your retail or self-managed super fund. Owning an insurance policy through your super fund means you won’t pay any premiums out of pocket and will still be protected.

Many retail super funds come with a standard Life Insurance policy, but for most people (especially those who are self-employed with business expenses that remain even after their death) this standard cover might not be enough. It’s a good idea to check with your super provider what level of insurance cover you have and upgrade your policy if you believe it is inadequate.

For greater peace of mind for you and your family, chat to one of our professional advisers about your insurance options through your super fund or SMSF.

A super fund is just as essential for a self-employed person planning for retirement as it is an employee. With the right planning in place, you can set yourself up for a comfortable retirement, ensuring you’re spending more time with the grand kids and less time worrying about your finances in your golden years.

Banner - Take control of your finances