Co-Contribute to increase your super fund.
January 31st, 2008 | by winsonlee |
ATTENTION : This post is written for those whose income is less then $58,980. If you earn more then $58,980, don’t bother reading this as you are not eligible for the government co-contribution.
I got a letter few weeks back informing me that AXA has received the co-contribution from the Government for 06/07 financial year. It took them more then half a year to process the co-contribution.
For those who has started working, you should have heard about co-contribution. Although many has heard about it, how many people is actually is making used of the fund that is allocated by the government? The reason co-contribution exist is assist eligible individuals to save for their retirement. Under the co-contribution scheme, the Government contributes $1.50 to super for every $1 in after-tax or personal contributions by a low-income earner. The maximum co-contribution is payable to those earning up to $28,980 a year. The amount is reduced by five cents for each dollar of income over $28980. The maximum co-contribution phase out at an incresed upper threshold of $58,980.
Example :
If you are earning $40,000/year, with the maximum contribution, you will be getting
$1500 - ( ($40,000 -$28,980) x $0.05) = $949 if you contribute ($949/3 *2) = $633 within that financial year. You will need to contribute $77.75 in a month.
If you decide not to contribute, you should be thinking what kind of investment actually gives us 150% in return in a year? Do consider not to contribute only if you are making use of the $77.75 to generate you more then 150% profit in return. If not it will be better off putting the extra money into the super fund.
Part of our income has gone to tax and now government is putting an offer back to us. There is no reason why people does not grab this offer.
