Voluntary Superannuation Contributions Increasing, Says i3 Group

i3 Group says that households are increasing their contributions to superannuation funds.

Niddrie, Victoria, Australia (prHWY.com) March 14, 2013 - i3 Group is one of Australia's foremost payroll processing services provider. The company recently said that households in Australia have increased their contributions to superannuation funds.

The last quarter of 2012 was good for share markets worldwide. In Australia too, investor sentiments were positive and this reflected in the increase of superannuation contributions. Superannuation funds received more than $21 billion in the last quarter, which is 10% more than what was collected in the quarter ending September.

More than $3.5 billion of this money consisted of voluntary contributions, which is an increase of more than 10% over last year. Voluntarily contributions are monies put into the super accounts by investors on their own, and investors can do this anytime they want.

It was the first time since September 2011 that discretionary contributions to the super accounts have increased. It is a sign that confidence in the market has increased and that households have become more trustful. Also the fact that there was no bad news from the US and Europe last year had played a part. More than $117 billion had poured into superannuation funds last year, which is a record of sorts (the second highest yearly inflow into the super funds of all times).

This is a significant increase because rebound in contributions to the super funds was usually employer-driven, which is mandatory in most cases. Voluntary household contributions are not known for driving rebounds. Though there was a bounce during the last quarter, voluntarily contributions had reduced slightly, considering the entire year. It cannot be said if the contributions can be sustained over time because of fragile market conditions.

The increase in voluntarily contributions to the super accounts is good news for the super funds industry. But consumers are still very cautious. The growth is slower than what was observed prior to the global financial meltdown.

People who are not sure if their employer's superannuation contributions will fund their retirement comfortably are making personal contributions to their super accounts to improve their retirement prospects. Voluntary superannuation contributions are of two varieties - pre-tax and post-tax contributions.

Pre-tax contribution is known as 'salary sacrifice'. In salary sacrifice, the employee agrees to forgo some part of his or her salary offered by an employer, which is exchanged for a superannuation contribution. This contribution is taxed. Post tax contributions are made after tax has been paid on wages or salary. These contributions are not taxed.

About i3 Group

i3 Group is one of the popular specialist payroll processing companies that offer services to many industries. They offer customized payroll solutions. Their payroll services have been appreciated by one and all for the reasonable costs they charge.

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Tag Words: payroll processing, individual taxation, income tax, social security laws, payroll

Categories: Finance

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