Superannuation funds are designed to allow contributions to accumulate for a person's retirement.
There are three main types of superannuation funds:
- Employer sponsored funds established for the benefit of employees.
- Industrial funds established under an industrial agreement or award.
- Personal superannuation funds established for self employed or employees who wish make their own personal contribution.
There are rules governing the level of contributions a person can make and the benefits they can receive in their retirement. Because benefits do have restrictions there is a concessional rate of tax applied to superannuation (15% of contributions and earnings).
Rolling over refers to transferring your money from one concessionally taxed super fund to another.
There are a number of advantages to using this system. Firstly, no lump sum tax is paid on the money you are transferring. Secondly, you continue to receive the concessional 15% tax rate of your earnings from your lump sum rollover.
You can rollover into either another super fund, an approved deposit fund, or a deferred annuity.