FINS2643 Lecture Notes - Lecture 8: Population Ageing, Tax Deduction, Tax Rate
Friday, 27 April 2018
M08 - Superannuation
Learning Outcomes!
-Explain the structure and regulations of the Australian superannuation system!
-Discuss different types of superannuation funds!
-Discuss the rules and taxation of various types of super contributions!
-Explain the rules and taxation of lump sum and different types of pension benefits!
-Understand the recent reforms to the super system !
M08-3 The Structure and Regulations of the Australian Superannuation System!
The Three-Pillars to Retirement Funding!
-Age pension!
-Occupational based superannuation contribution!
-Superannuation Guarantee!
-Personal superannuation contribution!
Superannuation System!
-A long-term savings plan that is designed to provide income support for people
after retirement!
-Investment enjoys significant tax benefits:!
-Reduce the dependency on social security for retirement support!
-Ageing population!
-Declining rate of savings too the general population!
-Restrictions on access the funds!
-Not a separate invest option: similar options as investment outside super!
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Friday, 27 April 2018
Stages of Superannuation!
Contributions!
-Usually involves cash being paid into a superannuation fund for its members !
-Contributions may be made by:!
-As employer fro employees!
-Employees!
-People under age 65 with or without employment!
-Spouse!
-The government as a co-contribution !
Accumulation!
-The balance is invested and taxed at the concessional rate of 15% on income
and 10% on long term capital gain!
Drawdown!
-Must meet at least one condition of release under the Superannuation Industry
(supervision) Act 1993!
-Payout in lump sum and/or pension (income stream)!
-Earning on pension assets are taxed at 0% !
-These stages may be concurrent !
Types of Benefits!
-Defined Benefit Funds (uncommon to be available now) !
-Payout based on a formula typically related to income in the final year of
employment, the number of years of service and contributions!
-Investment risk is absorbed by the fund!
-In the US, they are called pension funds!
-Highly diverse products and require substantial research before advice!
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Friday, 27 April 2018
-Accumulation Funds (almost all new plans)!
-Investment risk is absorbed by fund members!
-In the US they are called 401k plans!
Regulations of Superannuation in Australia!
-Income Tax Assessment Act 1997!
-Provides the tax incentives to save for retirement.!
-The Superannuation Industry (Supervision) Act (SIS Act) 1993!
-Regulates the administration of superannuation funds!
-Requiring superannuation funds to have a ‘prudential framework’!
-Restricting funds from investing in particular !
-Ensuring members are notified about their benefits!
-Requiring trustees to ensure the security of funds !
-Corporation Act 2001!
-Regulates the companies that operate the superannuation funds !
-Disclosure!
-Product Disclosure Statement!
-Financial Product Advisor!
-Licensing!
Regulators!
-APRA!
-Super fund industry!
-ATO!
-Self-managed super funds!
-ASIC!
-The fund management industry!
-Super Complaints Tribunal (SCT) !
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Document Summary
Explain the structure and regulations of the australian superannuation system. Discuss the rules and taxation of various types of super contributions. Explain the rules and taxation of lump sum and di erent types of pension bene ts. Understand the recent reforms to the super system. M08-3 the structure and regulations of the australian superannuation system. A long-term savings plan that is designed to provide income support for people after retirement. Reduce the dependency on social security for retirement support. Declining rate of savings too the general population. Not a separate invest option: similar options as investment outside super. Usually involves cash being paid into a superannuation fund for its members. People under age 65 with or without employment. The balance is invested and taxed at the concessional rate of 15% on income and 10% on long term capital gain. Must meet at least one condition of release under the superannuation industry (supervision) act 1993.
