As someone who is newly self-employed through my own (new) company, what do I need to be aware of, when choosing a superannuation fund to begin contributions to?
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Firstly, let me congratulate you on starting a new business. I wish you all the best!
Australia is built on the strength of new businesses like yours.
The first thing we would need to discuss is what ownership structure you have chosen for your business. If you have chosen to be an employee of your own company, or a company that is the trustee of a trust, and you pay yourself a salary, you will be obliged to pay 9.5% of any salary you draw into superannuation. Check this with your business adviser.
Secondly review the super that you currently have. Most folk have some kind of existing super, perhaps with their most recent employer. That or those funds may still have some residual insurance – perhaps Life, TPD (Total and Permanent Disability) or even income protection.
You may wish to leave some money in those funds to keep funding those insurances. Particularly if you have an existing medical condition, it may be difficult to get new cover. Note though that the income protection may be indemnity style – i.e. you will only be covered for say 75% of what you earned in the prior 12 months; which may be next to nothing when starting out.
One of your existing super funds might be a suitable vehicle to continue with.
Thirdly consider what is important to you in saving for your future. If you are younger and have a long time till retirement, you may be happy with a ‘plain vanilla’ fund. But if you are closer to retirement and want to manage the downside of (say) another GFC, this may call for a fund manager that can smooth out that volatility for you.
Fourthly consider if you will be hiring staff. If so can the new super fund easily accommodate your staff’s needs (assuming your staff don’t nominate their own fund). Is it easy to administer? How are the net returns? Does it provide good insurance terms for them (and you)? Give them a call – are you on the phone for ages, or is service prompt and efficient?
Finally consider how you invest the money within the fund. Does it match your Risk Profile (essentially what are comfortable with investing in). You may be able to assess this with a tool provided by the fund – or you may need to seek advice, perhaps from someone at the fund on the phone (intra-fund advice), or with a face to face adviser.
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