Superannuation pensions are not heavily taxed with the intention of encouraging increased contribution from the employee and employer. This also increases the amount of the potential payout at the end of the term.
With average age expectancy rising and workforce in a country expanding, superannuation pensions become essential for optimal financial planning and asset management. Superannuation pension policies are different in every country, but the objective of providing a steady income in life after employment remains the same.
In the US, the Social Security Administration is by far the most prominent provider of superannuation pensions. The pensions here are funded by contributions from both employer and employees. The accumulated pension funds become prime investment capital for various financial instruments. The laws that regulate the tax liability of a superannuation pension fund have been reduced. Taxes on the interest are deferred till the withdrawal of the funds from the account upon retirement.
Superannuation pensions in Australia are paid through employment related contributions. The Australian superannuation scheme is employer funded and the deposits to the pension fund account are regulated by the government. Employers are entitled to pay up to 9% of the employer’s earnings into the retirement fund.
Superannuation pension benefits are paid to persons over 60, tax free, provided he/she has been a citizen or resident for at least ten years in Australia.
In India, a superannuation scheme is a prerequisite facility given to employees in various organizations as part of their employee retention strategy. The superannuation scheme allows deduction up to 15% of the basic and in combination with the provident fund must not exceed 27% of the total compensation as per existing rules under the Income Tax guidelines. Superannuation can be utilized through different insurance providers, both government and private. Superannuation pension schemes are defined contributions in nature and an employee can withdraw it any time.
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