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Go back a month or two and you’d be forgiven for thinking we were on the fast track to pay rises all round. The unemployment rate fell to its lowest level in a decade in June, at 4.9 per cent, as government stimulus spending, closed national borders and zero community COVID-19 fuelled a post-pandemic recovery. Fast forward a few months and the outlook is more uncertain. As the pandemic has shown us time and time again, COVID-19 is an unpredictable beast. Large parts of the country have been plunged into extended lockdowns to combat outbreaks of the Delta strain. As a result, every state and territory experienced a fall in payroll jobs in the first half of July, with NSW the worst hit, down 4.4 per cent. What’s the outlook for jobs? Economists are now forecasting the jobless rate to rise and the economy to contract in the September quarter. The Commonwealth Bank of Australia has forecast 300,000 job losses in Sydney alone, with unemployment peaking at 5.6 per cent in October. But it’s not all doom and gloom, especially for those states that have had brief, or no, lockdowns. And some sectors continue to thrive, despite, or perhaps because of, the pandemic. Which industries are recruiting? So if you’re looking for a new job, which industries are hiring? Recruitment firm Hays surveyed 3500 employers for their FY 20/21 salary guide. Their findings confirmed strong hiring intentions in several sectors, with almost half of employers (47%) planning to grow their permanent headcount over the next 12 months. Unsurprisingly, the life sciences industry was among those with a “huge need for staff”, with 61 per cent of employers planning to add more permanent jobs in the next year. They were followed by the legal industry, contact centres, technology, engineering and human resources, which all planned to add more headcount. The construction industry is also doing well, as anyone who has tried to get a tradesperson to their house will tell you. “With employers intending to expand their workforce, in some areas the demand for skills now exceeds supply,” says Hays. “Add border closures, which severely limit the supply of skilled professionals into the country, and the supply and demand imbalance has tipped in favour of candidates.” Hays also found that more than two thirds of employers (67%) plan to offer pay increases in the next round of reviews; but they’ll be less than employees want.     What’s the impact of closed borders? While businesses aren’t splashing too much cash on salary increases just yet, the tide may turn in the coming year. With the international border closed, the pool of available workers is tightening. Economists say that could eventually lead to higher wages, as employers are forced to compete for talent. Around 250,000 overseas workers have left the country since the beginning of the pandemic, according to Reserve Bank of Australia governor Dr Philip Lowe. “If the borders remain completely closed and we can’t get workers into the country that are needed for firms to expand and invest, then I think we will see more wages growth,” he said. This outlook really does rely on the border staying closed for some time, which may not happen if vaccination rates reach the federal government’s 80 per cent target within the next year. So what should workers do? With all the uncertainty about, is it still a good time to change jobs? If you’re unhappy at work, or feel like your career growth has stalled, it’s always worth looking around. Depending on your profession, you might be surprised by the opportunities on offer. Consider also using this time to upskill and make yourself more attractive to employers. While the outlook isn’t quite as rosy as it was just a few months ago, the COVID-19 pandemic is nothing if not unpredictable. With the global economy opening up again, there’s sure to be more demand for Aussie goods and services in the very near future.   Source: Money and Life

Conventional wisdom used to dictate Australians were better paying off their home loans, and then, once debt-free turning their attention to building up their super. But with interest rates at record lows and many super funds potentially offering a higher rate of return, what’s the right strategy in the current market? One thing to consider is the interest rate on your home loan, in comparison to the rate of return on your super fund.  As banks follow the RBA’s lead in reducing interest rates, you may find the returns you get in your super fund are potentially higher. Super is also built on compounding interest. A dollar invested in super today may significantly grow over time. Keep in mind that the return you receive from your super fund in the current market may be different to returns you receive in the future. Markets go up and down and without a crystal ball, it’s impossible to accurately predict how much money you’ll make on your investment. Each dollar going into the mortgage is from ‘after-tax’ dollars, whereas contributions into super can be made in ‘pre-tax’ dollars. For the majority of Australians, saving into super will reduce their overall tax bill – remembering that pre-tax contributions are capped at $27,500 annually and taxed at 15% by the government (30% if you earn over $250,000) when they enter the fund. So, with all that in mind, how does it stack up against paying off your home loan? There are a couple of things you need to weigh up. Consider the size of your loan and how long you have left to pay it off A dollar saved into your mortgage right at the beginning of a 30-year loan will have a much greater impact than a dollar saved right at the end. The interest on a home loan is calculated daily The more you pay off early, the less interest you pay over time. In a low interest rate environment many homeowners, particularly those who bought a home some time ago on a variable rate, will now be paying much less each month for their home. Offset or redraw facility If you have an offset or redraw facility attached to your mortgage you can also access extra savings at call if you need them. This is different to super where you can’t touch your earnings until preservation age or certain conditions of release are met. Don’t discount the ‘emotional’ aspect here as well. Many individuals may prefer paying off their home sooner rather than later and welcome the peace of mind that comes with clearing this debt. Only then will they feel comfortable in adding to their super. Before making a decision, it’s also important to weigh up your stage in life, particularly your age and your appetite for risk. Whatever strategy you choose you’ll need to regularly review your options if you’re making regular voluntary super contributions or extra mortgage repayments. As bank interest rates move and markets fluctuate, the strategy you choose today may be different from the one that is right for you in the future. Source: AMP

An effective way of building your super savings (and potentially reducing your taxable income) is through salary sacrificing – that is, asking your employer to put some of your before-tax income directly into your super fund. The amount you salary sacrifice is on top of the Super Guarantee (SG) contributions your employer must pay which increased to 10% on 1 July 2021. Why should I consider salary sacrificing into super? Build your super faster Making extra payments into your super can help build your super savings more quickly. What’s more, the longer you have your money invested, the more you will enjoy the benefits of compound interest. For your super account, this means the investment return is generated on the returns you’ve already earned. Pay less income tax If you choose to reduce your before tax income by salary sacrificing into super, you may be able to reduce what you pay in income tax for the financial year. You only pay 15% tax on contributions made through a salary sacrifice arrangement if you earn under $250,000 a year or 30% if you earn over $250,000 a year. This tax is likely to be less than your marginal tax rate, which you can find on the Australian Taxation Office (ATO) website. How much should I contribute? Every year, you can make up to $27,500 of concessional contributions to you super without incurring extra tax. Some people can contribute more if they are eligible for ‘Carry-forward unused concessional contributions’. It’s important to note that other contributions count toward your concessional contributions can include SG contributions made by your employer and contributions you make using after tax dollars and where you claim a tax deduction. To work out the right amount for you: Check to see how much super your employer pays. Work out your day-to-day expenses now to decide how much you reasonably put aside for retirement (even if it’s only a small amount – every bit counts). Make sure that the total of your concessional contributions don’t go over your concessional contributions cap, or you could end up paying extra tax. How Kevin saved on tax Kevin earns $1,100 a week ($57,200 a year) before tax. He decides to salary sacrifice $40 a week. This means his income tax will be calculated on the $1,060/week he now receives ($55,120 a year). If Kevin didn’t salary sacrifice, the estimated tax on his salary of $57,200 would be $8,979. After salary sacrificing, he only has to pay $8,230 in tax. The money he put into super is only taxed at 15%, rather than Kevin’s marginal rate, which is 32.5%. How Janine stayed on budget and under the contributions cap Janine earns a salary of $120,000. Her employer pays an SG of 10% of her salary, which is $12,000 a year. Janine can make up to $15,500 worth of concessional contributions into her super through salary sacrifice without going over the concessional contribution cap of $27,500. Janine works out that she can afford to sacrifice $80 a week of her before-tax salary – that’s $4,160 a year. In total, she’ll make $16,160 in concessional contributions, which keeps her under the $27,500 cap. Over 10 years, at this rate Janine would have boosted her super by an extra $41,600. How do I set up salary sacrifice? It’s always a good idea to speak to your financial adviser and see if a salary sacrifice arrangement is right for you. Things to consider if you decide to salary sacrifice into super: Check your employer offers salary sacrifice. Decide how much you’d like to sacrifice into super. Notify your employer and get the agreement in writing Make sure you don’t exceed the concessional contributions cap What else you should know Before you salary sacrifice, it’s important to remember that super is a long term investment and you can’t access this money until you reach age 65, or meet another condition of release (such as financial hardship). If your employer doesn’t offer salary sacrifice, there are other ways you can contribute into super.   Source: Colonial First State

Since marriage equality was achieved in 2017, LGBTI people have had access to the same legal and financial rights as heterosexual married couples. Yet members of the LGBTI community still face some unique challenges when it comes to their financial wellbeing. So what do same sex couples need to know when it comes to planning their financial lives together? It’s been a long, hard road for Australia’s LGBTI community to achieve equality under the law, but thankfully, that’s now the case. From the Same Sex Relationships Act 2008, to the Sex Discrimination Act 1984 amendment in 2013, and more recently, the Marriage Act 1961 amendment in 2017, LGBTI people have won the right to live, work and marry free of discrimination. Despite the progress, some LGBTI people – who make up approximately 11 per cent of the population – still experience discrimination, harassment and hostility in many parts of everyday life. Research suggests this has a direct impact on their financial wellbeing, with LGBTIQ people 28 per cent less likely to own the home they live in, twice as likely to be single, and less likely to share their expenses, assets and retirement savings. Challenges for de facto couples For members of the LGBTI community who are in a de facto relationship (unmarried), there can be some extra hurdles when it comes to accessing their legal and financial rights. As Associate Professor Fiona Kelly and Hannah Robert, of La Trobe University, wrote at the time of the marriage equality debate in 2017, “while de facto couples may be able to assert some of the same rights as married couples, they often have to expend significant time, money and unnecessary heartache to do so”. If you’re in a de facto same sex relationship, here are three areas worth paying extra attention to: Tax time – do I have a spouse? The ATO considers you to have a ‘spouse’ for tax purposes if another person (of any sex) lived with you on a genuine domestic basis in a relationship as a couple. The ATO doesn’t specify how long you need to have been in a relationship or living together. If you have a spouse under tax law, you’ll need to include details of their income in your tax return. This is used to work out your household income, which affects your Medicare levy surcharge and private health insurance rebate, as well as certain tax offsets and benefits. Estate planning Keeping your estate planning documents up to date is especially important for de facto LGBTI couples, so you can be sure that your affairs will be handled according to your wishes. As Hall & Wilcox lawyers point out, “a de facto partner may not be considered next of kin and allowed to make medical and end of life decisions on behalf of their partner, or may have problems in proving their right to their deceased partner’s estate. This can force them to have to prove their relationship status in Court and is one of the significant legal benefits of marriage, as it removes this risk.”   An estate plan sets out what you’d like to happen to your assets and affairs when you pass away, or if you’re no longer able to manage your own affairs. It typically includes several documents that give instructions on how to distribute your financial assets, as well as who will have responsibility for the care of any dependents. These include:   your will total and permanent disability (TPD) and life insurance superannuation death benefit nominations powers of attorney and/or guardianship. Inheritance law can be complex, so it’s important to get professional legal advice to draft your estate planning documents. What about my superannuation? Superannuation law is another area that has undergone major reforms to standardise the financial rights for LGBTI individuals. Since 2008, same sex couples have been entitled to: nominate and receive superannuation death benefits upon the death of a spouse receive tax concessions on super death benefits split superannuation contributions make and receive a tax offset for spousal contributions establish SMSFs together If you’re in a de facto relationship, you’ll need to take extra steps to make sure your super death benefits (including any insurance benefits) are paid as you intended. The safest way to ensure your superannuation is paid to your partner, or another dependent of your choice, is to fill out a Binding Death Benefit Nomination. You must renew the binding nomination every three years to keep it current. Simply nominating a recipient in your will isn’t enough, because superannuation proceeds don’t form part of your estate in death. Instead, the trustee of your super fund must pay your benefit to “a surviving partner, children or dependents, or to the deceased’s estate”. If there’s no Binding Death Benefit Nomination in place, the trustee may distribute the funds according to your wishes – or not. Again, make sure you seek professional legal advice if you’re in any doubt about the best way to ensure your assets are distributed according to your wishes. Marriage equality was a major step towards bridging the gap between same-sex and opposite sex-couples when it comes to their legal and financial rights. As social attitudes and values continue to play catch-up, a growing number of LGBTI people are choosing to access quality financial advice to help them plan for their family’s financial future Source: Money and Life

Super is there to provide you with an income when you stop working and it may provide a tax-effective way to save for your retirement over the long-term. What’s probably more interesting, is in time, your super may become one of your largest assets. We don’t often think about that, but it’s a good reason why you may want to pay closer attention to it. Here are some things worth knowing or which may even interest you to investigate further. Who pays your super Generally, your super savings will build up over the course of your working life, as money you earn is put into super by yourself, or by your employer under the super guarantee, if you’re eligible. You can make additional voluntary contributions to your super to boost your retirement savings if you choose to. However, there are limits on the amount you can contribute each year and there are separate caps, depending on the types of contributions you’re making. Where your money’s invested Any time money is deposited into your super, it’s invested on your behalf by the trustee of your super fund. Investments can be made into property, shares, cash deposits and other assets depending on your default investment profile, or if you’ve made your own investment selections. Most funds will allow you to choose from a range or mix of investment options and asset classes and choosing the most suitable option will typically come down to your attitude to risk and the time you have available to invest. How to see what your employer’s paying you Super guarantee (or SG) contributions made by your employer, if you’re eligible, should be at least 10% of your ordinary (not overtime) earnings if you’re making $450 or more each month. Note, others may also be eligible. Meanwhile, as these contributions may be the foundation of your future savings, it’s important to check they’re being paid correctly. You can do this by reviewing your payslips, checking your super statements, calling your super fund or logging into your online account to see what’s been put in. Keep in mind, employer super contributions also only have to be paid into your fund four times a year (at a minimum), on dates set by the ATO, which means your super may be paid at different times to your employment income. Where to go if something doesn’t look right If your employer hasn’t paid your super, speak to the person who handles the payroll at your work. If you’re not satisfied with what they tell you, you can lodge an unpaid super enquiry with the ATO. How your current super balance stacks up In many cases you can check out your super balance online via your super fund’s website or the statements they send you. Meanwhile, if you’re interested to know how your balance fares and what you might need each year in retirement, the Association of Superannuation Funds of Australia puts out a report each quarter. If you’re curious to know how your super balance shapes up against others your age, check out the average super balances for employed people of different age groups across Australia. How to find your lost or unclaimed super At last count, there was more than $13 billion in lost and unclaimed super waiting to be claimed across Australia. That can happen when you set up a new super fund and forget to roll over what you accumulated in a previous one, or if you forget to update your details with your providers when you change them. You can search for lost or unclaimed super by doing a super search with your current super fund or by logging into your MyGov account to find your super funds. What to look out for if you roll two funds into one If you have more than one super account, there may be advantages to rolling your accounts into one, such as paying one set of fees and less paperwork. If you do decide to consolidate, make sure you don’t risk losing features and benefits including life and other insurance that may be attached to the account you’re considering closing How to check your insurance if you have it Most super funds let you pay for personal insurance out of the money in your super fund, but there are pros and cons worth weighing up. For instance, insurance through super can often be cheaper than personal insurance bought outside super, but you may not get the same level of cover. How to make sure the right people get your money if you pass away If you don’t nominate a beneficiary with your super fund, your super fund may decide who receives your super money when you pass away, regardless of what you have in your will. There are generally two types of beneficiary nominations you can make, binding and non-binding. If you make a binding nomination, your super fund is required to pay your benefit to the person or people you’ve nominated, as long as the nomination is valid when you pass away. Keep in mind, some binding nominations are lapsing and may only remain valid for three years. If you make a non-binding nomination, your super fund will have the final say as to who receives your super benefits, but they will attempt to find all potential beneficiaries and decide who’s the most appropriate. What age you can withdraw your super The government sets general rules around when you can access your super, which typically won’t be until you reach your preservation age (which will be between 55 and 60, depending on when you were born) and meet a condition of release, such as retirement. At this time, you may choose to take the money as a lump sum, income stream, or even a bit of both. Meanwhile, there may be some special circumstances where you may be able to withdraw your super early. When can you no longer contribute to super Once you turn 75, generally you … Read more