Superannuation Planning for Medical Professionals in Australia

Australia’s superannuation system has undergone several transformations in the past 40 years, with a constant goal of providing retirees with savings after years of dedicated work. One can also choose to make additional contributions to their superannuation fund, which can offer significant tax advantages. Salary sacrifice or tax-deductible contributions are two ways to make voluntary contributions.

Since 1992, there has been a requirement for employers to make a minimum contribution, officially referred to as the “superannuation guarantee (SG) contribution.” This contribution currently stands at 10.5% (for the 2022-23 year) of your wage or salary and must be made on a quarterly basis at the very least.

Typically, individuals aged over 18 are eligible for superannuation contributions from their employer, regardless of their employment status, whether it be casual, part-time, or full-time. This eligibility even extends to temporary residents. Prior to 1 July 2022, employees who earned less than $450 in a month were not entitled to the superannuation guarantee. However, this threshold has since been eliminated.

Understanding Super for Medical Professionals

Medical professionals in Australia, like all other employees, are eligible to receive contributions from their employers into a superannuation fund of their choice. These contributions are made on top of an employee’s salary and are intended to help provide for the employee’s retirement. The employee can also choose to make additional contributions to their superannuation fund. 

medical professionals

The Australian government also provides tax incentives for individuals to save for their retirement through superannuation.

Participating In The Superannuation Program

We all know that it is mandatory for employers to provide their employees with a superannuation program, including medical professionals. It can be a little confusing, but here are important reminders about the superannuation program in Australia.

  1. Choose a superannuation fund

    Medical professionals can choose a superannuation fund that suits their needs. They can compare different funds and consider factors such as fees, investment options, and insurance cover.
  2. Provide fund details to the employer

    Once a medical professional has chosen a fund, they will need to provide their employer with the fund’s details, including the fund’s name and Australian Business Number (ABN).
  3. Employer contributions

    Employers are required to make contributions to their employees’ superannuation funds on a regular basis, usually at least quarterly. These contributions are calculated as a percentage of an employee’s salary, with the current mandatory rate being 9.5% of an employee’s ordinary time earnings.
  4. Additional contributions

    Medical professionals can also choose to make additional contributions to their superannuation fund using their own money. These contributions can be made before or after tax and may be eligible for a tax benefit.
  5. Track your super

    It is important for medical professionals to keep track of their superannuation account and ensure that their employer is making the required contributions. They can do this by checking their account balance and transaction history, and by receiving regular statements from their superannuation fund.
  6. Retirement

    Once a medical professional reaches retirement age, they can access the money in their superannuation fund to provide for their retirement income.
age of retirement

There is no specific application form for superannuation in Australia. Employers are required by law to process superannuation contributions on behalf of their employees, provided the employees are eligible. However, employees are responsible for choosing their own superannuation fund and providing their fund details to their employer. 

Employees can compare different funds and consider factors such as fees, investment options, and insurance cover to choose a fund that suits their needs. It’s important to keep track of your superannuation account and ensure that your employer is making the required contributions.

What You Need To Remember About Super

Before choosing a superannuation fund, medical professionals should be aware of many  important factors. Understanding these can help make informed decisions and maximise retirement savings.

  1. Insurance coverage

    Many superannuation funds offer insurance coverage, such as life insurance and income protection insurance, as part of their package. Medical professionals should check if their fund offers this type of coverage and if it meets their needs.
  2. Consolidating super

    Medical professionals may have multiple superannuation accounts if they have changed jobs or started working as a contractor. They may want to consider consolidating these accounts to make it easier to manage and potentially save on fees.
  3. Preservation age

    Medical professionals will not be able to access their superannuation funds until they reach a certain age, called the preservation age. The preservation age depends on the individual’s date of birth and it is between 55 and 60 years old.
  4. Tax on superannuation

    There are tax rules for superannuation in Australia, which may affect the amount of money that can be withdrawn from the fund at retirement and also the amount of contributions that can be made.
  5. Spouse contributions

    Medical professionals can make contributions to their spouse’s superannuation account, which may be eligible for a tax offset.
  6. Co-contribution scheme

    The Australian government provides a scheme that helps low and middle-income earners to save for their retirement. If a medical professional earns less than $38,564 per annum, and makes a personal contribution to their superannuation account, they may be eligible to receive a co-contribution from the government.

When can medical professionals access super?

access super

Medical professionals in Australia can access their superannuation funds once they reach their preservation age, which is the minimum age at which they can access their superannuation benefits. The preservation age depends on the individual’s date of birth, and it ranges from 55 to 60 years old.

The specific preservation age is:

  • 55 years old for those born before 1 July 1960
  • 56 years old for those born between 1 July 1960 and 30 June 1961
  • 57 years old for those born between 1 July 1961 and 30 June 1962
  • 58 years old for those born between 1 July 1962 and 30 June 1963
  • 59 years old for those born between 1 July 1963 and 30 June 1964
  • 60 years old for those born on or after 1 July 1964

It is important to note that even if a medical professional reaches the preservation age, they may not be able to access their superannuation funds if they are still working. In such cases, they can access their superannuation benefits only under certain conditions, such as when they have retired, turned 65 or have met a condition of release.

It’s also important to note that, once the superannuation benefits are withdrawn, they cannot be put back into the superannuation account, so it’s essential to think carefully before accessing them.

Bottomline

Medical professionals face unique challenges when it comes to managing their superannuation. It is important to work with a qualified and experienced accounting firm that understands the nuances of the industry and can provide tailored solutions. 

At BloomWealth Accountants, we specialise in helping medical professionals optimise their superannuation strategies, so they can focus on what they do best – providing exceptional patient care. Contact us today to learn more about how we can assist you in securing your financial future.

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