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Home / How super works / Super for beginners / 10 hidden perks that make your super account even better

10 hidden perks that make your super account even better

January 1, 2020 by Janine Mace Leave a Comment

Reading time: 3 minutes

On this page

  • 1. Slash your income tax bill
  • 2. Avoid having a medical for insurance
  • 3. Ensure your money goes where you want
  • 4. Pay less tax on your investment returns
  • 5. Cheaper insurance cover for members
  • 6. Protection against bankruptcy
  • 7. Free money from the government
  • 8. Tax-free income in retirement
  • 9. Continuing insurance cover
  • 10. Ability to invest in bigger assets

Besides being a great way to save for retirement, Australia’s super system offers some valuable – but little-known – benefits for super fund members.

If you’re in the right super fund, there is a swag of freebies and helpful services you can receive – often without having to lift a finger.

Here’s SuperGuide’s list of the top 10 super benefits and how they can help improve your financial situation.

1. Slash your income tax bill

Super provides a simple way to reduce the amount of income tax you pay each year.

By setting up a salary sacrifice arrangement with your employer, you can swap the income tax rate you would normally pay on some of your earnings with the lower 15% super contributions tax rate.

For more information see SuperGuide articles Salary sacrifice and super: How does it work? and How do tax-deductible superannuation contributions work?

If your employer is not on board with salary sacrifice, then consider making a voluntary personal contribution and claiming a tax deduction. Since 1 July 2017, most people aged under 75 can claim a tax deduction for voluntary personal contributions they make into their super account up to the annual concessional (before-tax) contributions cap of $25,000 (in 2019/20 and 2020/21).

Are you with a top performing super fund?

Click here to compare more than 90 Australian super funds, including returns, fees, features, awards and more.

Good to know: Prior to 1 July 2017, only self-employed people and those earning less than 10% of their income from salary and wages could claim this tax deduction.

Under the new rules, most people under 75 years of age (this includes those aged 65 to 74 who meet the work test) can claim the tax deduction. For more information, see SuperGuide article How do tax-deductible superannuation contributions work?.


2. Avoid having a medical for insurance

Most large super funds automatically offer new members death and total & permanent disability (TPD) insurance cover without needing to undergo a medical examination, making it a great way to get insurance protection.

Automatic cover can be a real benefit for people unable to obtain cost-effective cover outside super due to age, or ill health. It can also be valuable if your annual premium is likely to include exclusions due to pre-existing medical conditions (such as heart problems or diabetes).

For more information see SuperGuide article Life insurance through super: A definitive guide.

3. Ensure your money goes where you want

Disgruntled family members challenging super death benefit payments are becoming increasingly common. If you use a binding death benefit nomination (BDBN) for your super account, you can ensure your super death benefit goes to the people you intended when you die.

A correctly made BDBN provides certainty your death benefit will be paid in accordance with your wishes, as the nomination is much less likely to be successfully challenged by a disgruntled beneficiary.

For more about death benefits, read SuperGuide articles:

  • Who gets your super when you die? A guide to death benefit nominations
  • Reversionary pensions: What they are and how they work
  • A simple guide to what tax is payable on super death benefits

Need to know: A BDBN is not binding on your super fund’s trustee if it nominates a person ineligible to receive your death benefit under the super system rules. This includes someone who is not a dependant or not your legal personal representative.


4. Pay less tax on your investment returns

Super funds work as a tax-effective ‘wrapper’ around your investments and this concessional tax treatment can create valuable tax savings if you earn a higher income.

Income generated by investing outside the super system in your own name is taxed at your normal marginal tax rate. Within the super system, however, income from the same assets is taxed at the lower rate of 15% (and any capital gains at 10% if the assets are owned for at least 12 months).

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For more information see SuperGuide articles Super for beginners: How superannuation is taxed and Income tax: Australian tax brackets and rates (2020/21 and 2019/20).

5. Cheaper insurance cover for members

Since most publicly offered super funds purchase insurance policies for their members in bulk, they can often negotiate a cheaper deal with insurers. In many cases, this makes insurance cover bought through your super fund far more cost-effective than buying it elsewhere.

Paying for insurance through your super fund also makes budgeting easier, as the premiums are automatically deducted from your super account. That way you don’t have to find extra money to pay for the premiums when they are due, although it does eat into your retirement savings.

For more information see SuperGuide articles:

  • Super funds with the lowest fees for life and TPD insurance
  • Super funds with the lowest fees for income protection insurance
  • How to compare super funds in 7 easy steps

6. Protection against bankruptcy

Holding your retirement savings in a regulated super fund generally means your super benefits are protected from your creditors if you are declared bankrupt.

This protection can be important (particularly for small business owners and professionals) in the event something goes wrong with your finances. Superannuation payments you receive before you go bankrupt, however, are not protected.


Need to know: There are special rules in place to prevent people from deliberately transferring their assets into the super system if they believe they are headed for bankruptcy.


7. Free money from the government

If you make non-concessional (after-tax) contributions into your super account, you could receive a bonus top-up from the federal government, called a co-contribution. Depending on how much money you earn, this co-contribution is tax-free cash paid directly into your super account to supplement your retirement savings. To receive the co-contribution, your super fund must hold your tax file number.

For more information read SuperGuide article How a government co-contribution can help boost your super savings.

There is more free money on offer if you are eligible for the Low Income Superannuation Tax Offset (LISTO), which was previously called the Low Income Superannuation Contribution. If you’re eligible and earn up to $37,000, this is a payment of up to $500 from the federal government directly into your super account.

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For more information read SuperGuide article How LISTO works (Low Income Superannuation Tax Offset).

8. Tax-free income in retirement

Once you retire on or after age 60, you are normally eligible to receive your super fund pension or lump sum without paying tax.

Super in retirement offers two key benefits:

  • Regular benefit payments without income tax paid as an account-based pension
  • No tax payable on the investment earnings or capital gains on the investment assets supporting your retirement phase pension.

Although the investment earnings supporting retirement phase pensions are tax-exempt, since 1 July 2017 retirees can only transfer a maximum of $1.6 million into a tax-free retirement phase account to pay their pension.

For more information read SuperGuide articles Your tax guide to accessing your super over age 60 benefits and Definitive guide to the $1.6 million transfer balance cap.


Good to know: If you receive your retirement phase benefit from an untaxed super fund (generally older public service super funds), some income tax may still be payable.

For more information see SuperGuide articles Your tax guide to accessing your super under age 60 and Your tax guide to accessing your super over age 60 benefits.


9. Continuing insurance cover

Most large super funds allow you to continue your insurance cover even if you switch jobs. This can be valuable if your super fund offers high levels of insurance cover difficult to obtain elsewhere.

Even if you cease being a member of your super fund, many insurers offer you the option of continuing your insurance policy at your own expense by switching to a personal policy. This allows you to obtain the same level of cover without having to produce evidence about your health.

For more information read SuperGuide article Insurance inside super: A definitive guide.


Good to know: If you switch jobs, always check you don’t have multiple insurance cover for the same protection. More than one policy does not mean more than one insurance payout.


10. Ability to invest in bigger assets

By pooling your retirement savings with other members in a large super fund or SMSF, you can invest in assets you wouldn’t be able to access as an individual investor.


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With a bigger pot of money to invest, super funds can make investments that would be difficult for individual investors with smaller sums to access, such as taking stakes in a motorway, office tower, or wholesale investment such as corporate bonds.

For more read SuperGuide articles Super investing for beginners and How investing in infrastructure boosts your super account.

Are you with a top performing super fund?

Click here to compare more than 90 Australian super funds, including returns, fees, features, awards and more.

Learn more about super for beginners in the following SuperGuide articles:

Super for beginners: How superannuation is taxed

December 3, 2020

How to compare super funds in 7 easy steps

October 1, 2020

Super investing for beginners

October 1, 2020

The easy way to find and consolidate your lost super

October 1, 2020

How super works: A beginner’s guide to superannuation

October 1, 2020

Can I get free financial advice?

September 15, 2020

10 points to check on your annual super fund statement

September 2, 2020

How to benchmark your super fund

January 4, 2020

10 key super fund fees: What are they and why am I paying them?

November 20, 2019

What to teach your kids about super

October 3, 2019

How to read a super fund PDS

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IMPORTANT: All information on SuperGuide is general in nature only and does not take into account your personal objectives, financial situation or needs. You should consider whether any information on SuperGuide is appropriate to you before acting on it. If SuperGuide refers to a financial product you should obtain the relevant product disclosure statement (PDS) or seek personal financial advice before making any investment decisions. Comments provided by readers that may include information relating to tax, superannuation or other rules cannot be relied upon as advice. SuperGuide does not verify the information provided within comments from readers. Learn more

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All information on SuperGuide is general in nature only and does not take into account your personal objectives, financial situation or needs.

You should consider whether any information on SuperGuide is appropriate to you before acting on it.

If SuperGuide refers to a financial product you should obtain the relevant product disclosure statement (PDS) or seek personal financial advice before making any investment decisions.

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