What is the least amount of superannuation you can pay? Can you email payroll and decide to not pay super anymore?

As a young property investor, I’m intending to be financially secure well before my superannuation would be released to me and may not even need it. I’ve recently taken up a contract role with a significant increase in pay (still as a PAYG employee), and now I’m paying nearly $250 a week in super. What I’d really like to do is use that money in my property investing to pay off my debt faster. What is the legal requirement, and how can you request a change to the level?

I looked into a Self Managed Super Fund, but I only have $70.000 in super at the moment so it isn’t really viable.

I had the very same query back in 1992 when compulsory super was first introduced when I was a lowly-paid university student and every dollar counted! 

When you are employed, your employer must pay super, known as superannuation guarantee (SG) contributions, on your behalf into a complying super fund.   SG contributions are paid every quarter by your employer at a minimum of 9% of your “ordinary time earnings”, up to the “maximum contribution base”. 

You are only entitled to have SG contributions paid on your behalf from your boss if you are between 18 and 69 years old and you are paid $450 or more before tax in a month.  It doesn’t matter whether your employment status is fulltime or casual nor if you’re only a temporary resident of Australia.  Those under 18 you must work more than 30 hours per week in order to be entitled have super contributions paid on their behalf.

The maximum contribution base limits the maximum amount of super support that employers have to provide each quarter. It’s indexed annually.  For the 2010/11 year the limit is $42,220 per quarter (equivalent to an annual salary of $168,880).  Your employer doesn’t have to pay SG contributions for any earnings above this limit.

Ordinary time earnings are used to work out any SG contributions payable for employees.  They are usually what you earn during ordinary hours of work and include allowances, bonuses, commissions and any over-award payments.  Ordinary time earnings exclude annual leave loadings, expense reimbursements and any overtime payments.

Over the next decade, the SG is being increased commencing with a 0.25% increase in the 2013-14 and 2014-15 years, followed by 0.5% rises each financial year until the SG reaches 12% in 2019/20.

The thing to remember is that the super is still your money, albeit in a different investment vehicle.  I despised compulsory super back in 1992 but twenty years’ on I am extremely grateful that a start was made to my future retirement.

If you are unsure if you are receiving the correct amount, then you can go to my website www.mrtaxman.com.au for an employee superannuation guarantee tool to determine your eligibility for the SG.

This article first appeared in the June 2011 issue of Your Investment Property Magazine www.Yipmag.com.au. Copyright Key Media Pty Ltd 2011.