All You Need to Know about the Total Superannuation Balance

Managing your finances should always be done as early as possible, whether you’re a student, a recent graduate, or someone who has been working for a while. The sooner you start managing your finances, the better off you’ll be in the long run, especially in your retirement. In Australia, your superannuation fund is the government-mandated retirement savings plan.

Your superannuation balance accumulates by your employer contributing a compulsory percentage of your gross salary into your superannuation fund, for the 2022 financial year, the minimum percentage is 10.5%. Furthermore, you are also able to contribute funds into your superannuation funds yourself from both your pre-tax and post-tax income. Any contributions are then invested to also grow the balance further. This ensures that everyone has some savings for retirement, and its straightforward process also makes it accessible for most people.

However, many people don’t know the importance of the total superannuation balance (TSB), so we’ll discuss the details in this article.

What Is the Total Superannuation Balance?

The total superannuation balance (TSB) measures an individual’s money in their superannuation account. It includes the employee’s and the employer’s contributions and any earnings on those contributions. The TSB is important because it provides a snapshot of an individual’s retirement savings at a particular time, which can be used to track their progress over time. It can also be used to compare different superannuation funds and investment options.

How Is the TBS Calculated?

Your TSB is all the money in your superannuation account, including personal and employer contributions and earnings.

According to ATO regulations, your TSB is calculated as follows:

ADDING:

• the accumulation phase value of your super interests that are not in the retirement phase
• the retirement phase value of your super interests
• the amount of each roll-over super benefit not already included in the accumulation phase value or the retirement phase value, i.e. rollovers that are in transit between super funds
• the outstanding limited recourse borrowing arrangement (LRBA) amount in an SMSF or small APRA fund you entered into from 1 July 2018, if either: the LRBA is with an associate of the fund or you have satisfied a condition of release with a nil cashing restriction

SUBTRACTING

• any personal injury or structured settlement contributions that have been paid into your super funds.

The value of your superannuation assets is generally the market value of those assets. For example, if you have contributed $50,000 into your superannuation account and the current market value of those assets is now $60,000, your total superannuation balance would be the latter price.

The Importance of the Total Superannuation Balance

It’s also worth noting that the TSB is not the same as your account balance. Your account balance is the amount of money you have in your superannuation account at any time. Your total super balance (TSB) is calculated on a given date, usually 30 June (the end of the financial year). From 30 June 2017, your TSB is used to determine whether you are eligible for several super-related measures for the following financial year.

Your total superannuation balance is vital because it determines your eligibility for several superannuation-related measures including:

• Carry-forward concessional contributions
• Non-concessional contributions cap and the bring-forward of your non-concessional contributions cap
• Work test exemption
• Government co-contribution
• Spouse tax offset
• Segregated asset method for calculating exempt current pension income

The Difference between the TSB and the Transfer Balance Cap

The Transfer Balance Cap regulation was introduced in 2017.

The TBC is a lifetime limit on the total amount of super that can be transferred into tax-free retirement phase income streams, including most pensions and annuities and is currently set at $1.7 million.

Your transfer balance amount is calculated using a credits and debits system. Super transferred into a retirement phase account will increase your transfer balance amount. Conversely, any lump-sum withdrawals you make from a retirement phase account will reduce your transfer balance amount.

Investment earnings won’t impact your transfer balance amount, even if they take your balance in retirement phase over $1.7 million. Also, pension payments won’t reduce your transfer balance amount.

Managing Your Superannuation Fund

To ensure you capitalise on any superannuation and retirement planning strategies available to you, and also avoid breaching any ATO regulations, it’s imperative to stay on top of your superannuation contributions and total superannuation balance. As you approach or enter retirement, you also need to be aware of the transfer balance cap.

The best way to monitor your contributions and balances is via your superannuation statements or by checking the ATO section of your MyGov portal.

Get Super Smart with Support from Newcastle Financial Planning Group

The TSB measures the amount of money you have in your superannuation accounts. Because of this, you must keep track of your TSB to ensure you do not exceed the limits on contributions and benefits. When you do, you can enjoy the many benefits of having a healthy superannuation balance.

If you need help with superannuation advice in Newcastle, Newcastle Financial Planning Group can help you! Our financial experts are here to help you ensure you have a steady cash flow, especially in your retirement. Call us or book online to secure your meeting today and learn how we can work together to achieve your financial freedom!

 

REFERENCES:

https://www.ato.gov.au/Rates/Key-superannuation-rates-and-thresholds/?=redirected_SuperRate&anchor=Superguaranteepercentage#Superguaranteepercentage