Maximise your support in retirement and services you can turn to if things go wrong.
Superannuation is commonly called ‘super’. It’s there to help support you financially when you stop work and retire, or when you’re transitioning into retirement. Think of it like a savings account that you can’t access, yet.
Knowing what to do with your super can feel difficult, but as an important part of your income entitlements and retirement savings, it could make all the difference to where your future could lead you. So if this topic is new to you or you’d like to better understand where you stand, we’ve compiled the essentials on superannuation and show you where to go for help.
What is super?
When you earn money at work, your employer will pay money into the super fund of your choice. In Australia, this is a compulsory requirement for your employer. Alternatively, if you are self-employed or work as a contractor, you have the option to contribute voluntarily to a super fund yourself.
Over time, your super fund will earn interest and returns on investments and can be a potentially significant sum by the end of your working life.
When you retire and reach the age of 55-60, depending on when you were born, you can access your superannuation in the form of a regular payment or a lump sum.
Financial risks
Superannuation is a contributory system. This means that the amount of money you get out of it in retirement mostly depends on the amount of money that has been put into it over the course of your working life. So, people who have earned a lot of money during their careers will have a lot of money in retirement.
Unfortunately, the other side of this is also true – people who didn’t earn much may not have much super in retirement. This means that income inequality in employment continues into people’s retirement.
Women at risk
This feature of the system disproportionately affects women. Women tend to earn less at work due to having lower wages on average than men. They also tend to take more time out of work due to parental leave, caregiving and traditional gender roles that see women take on more unpaid work around the home.
Will you have enough?
For people who don’t have enough super or other income to get by in retirement, the Australian government pays an old-age pension. This is means-tested, which means the more income, super, or other assets you have, the less you receive in the pension.
How the industry works
When you’re employed and receive pay, your employer makes payments to your super. All payments into your super are called ‘contributions’.
You have a choice
Employers must offer eligible employees a choice of super fund and a standard super choice form. When you move to a new job, you can move your existing fund across if you want to. So even if an employer recommends a specific fund to you, you can choose a fund that you prefer.
How much do you get?
The government sets the minimum percentage of your wages that your employer must pay to your super fund, currently that rate is 10.5% and is set to increase in the future. Some employers will pay above the minimum rate.
Super contributions form part of the compensation you receive for working. However, it is supposed to be in addition to the wages you earn, rather than being subtracted from them.
Who doesn’t get super?
If you’re self-employed or work as a contractor, then you probably won’t receive compulsory super contributions.
Should you look after your super?
The short answer is yes. Over the course of your working life, it’s important to keep track of what’s happening with your super, that you know where your money is, and that your employer is paying your super correctly.
To learn what’s involved, start with the resources from the Australian Taxation Office (ATO) on super, employee rights, and how to keep track of your super.
You can check your existing super by logging into the MyGov website. Or you can go straight to your fund’s login.
Types of super
There are different types of funds and different kinds of companies or organisations that run them. You could even manage your super yourself.
Types of funds
Most super accounts are accumulation-style products. Many of the defined benefit funds are now closed to new members.
Accumulation
The value of your super comes from contributions and the return on interest, and investments generated by that money.
Defined benefit
The value of your super is determined by a formula rather than investments. Professional financial advice is recommended before making a commitment.
Who manages super?
Super investing is typically managed by someone else or is self-managed. There are alternative, less common options that could be available to you, which you can read about at Moneysmart.
| Private for-profit companies | These are usually banks or investment companies. Being for-profit means that the company keeps some of the profits. | ||
| Industry super funds | These are membership funds that are run as profit-for-members. This means all profits are put back into the fund. Most larger funds allow anyone to join, and some funds may only be open to workers from a specific industry, like healthcare. These are mostly accumulation funds. | ||
| Self-managed super | You could choose to self-manage your own fund, where you directly oversee where money is invested. | ||
Choosing a super fund
Your choice of super fund is up to you, which is empowering in many ways. But when you’re new to it all, it can also be overwhelming.
General features to compare:
- performance
- low fees
- insurance (here’s optional insurance in super)
- Investment options
- Other specials and services
📌 See our insurance and making claims and investments pages.
Performance
Super funds report their performance, which makes it relatively straightforward to find out which are the best and worst performing funds.
It’s important to remember that past performance isn’t necessarily a reliable indicator of future performance. All super funds that make investments on your behalf, for example, are affected by developments in local and international markets, just like any other investment.
Where to find information
How to compare and choose super – Moneysmart resources on making a decision
YourSuper Tool – The ATO tool to help you choose a fund or switch from your existing fund
Super calculator – Find out your super balance at retirement
What about the comparison sites?
There’s the government-run site that helps you compare some but not all super fund products, plus there are the for-profit comparison websites that compare many more.
YourSuper comparison tool
The Australian government’s YourSuper comparison tool compares MySuper products only. MySuper is the simple, cost-effective and balanced super product that is, by law, the default investment option that must be made available to you when opening a super fund.
Other comparison websites
You may have seen comparison websites for things like home loans, credit cards, insurance or superannuation funds. These sites offer explanations of products, customer reviews and ratings, and price comparisons. They can also help you to decide what’s best for you. Though before you act on any recommendation, it’s important to know how comparison websites work.
- they are there to make a profit – the sites often take money from banks and other service providers to advertise their products at the top of lists, so make sure you’ve had a look to see how they’re rating and reviewing products.
- they might not be comprehensive – the sites might not have a list of everything that’s available, which means you might want to look at multiple sources before deciding.
How super is invested
Once you’ve selected a fund, there are a few options for how your money is invested on your behalf. This means how much risk your fund is permitted to take in order to get higher returns, and potentially what sorts of companies your fund is allowed to invest in.
Investment options
Super investing typically includes a mix of the following. The choices you make come down to your goals and how you feel about risk.
| Growth | Aims for high returns with higher risk, which means potential losses in years with economic downturns. | ||
| Balanced | Aims for reasonable returns with lower risk in years with economic downturns. | ||
| Conservative | Aims for low risk and so less chance of having bad years even with economic downturns, but can lead to lower returns. | ||
| Cash | Aims to guarantee earnings are not reduced by losses on investments. | ||
| Ethical | Aims to only invest in companies that meet environmental, social and governance standards, and so promotes ethical business practices. This type of investment can be growth, balanced, or conservative in terms of risk. | ||
Where does MySuper fit?
MySuper is the ‘default’ investment option that must legally be made available to you when opening an account. It’s made up of low-risk ‘balanced’ assets.
Visit Moneysmart for a comprehensive overview of super investment options in Australia.
Contributing to super
Any payments made into your super are called ‘contributions’ – usually in the form of employer contributions or voluntary contributions.
Employer contributions
As an employee, super contributions form part of the compensation you receive for working, along with your pay. Your employer should be contributing to your nominated super fund as part of your pay without you having to do anything – other than give them your fund details.
How much do you get?
The government sets the minimum percentage of wages that employers must pay to your super fund by law, though some employers pay above the minimum rate. These are called ‘before-tax’ contributions, as they’re made before tax is applied to your income.
You should receive super contributions from your employer at least every 3 months.
Who qualifies for employer contributions?
If you’re working full-time, part-time or casual and you’re either of the following, you qualify for super. There are also the age requirements – either aged over 18 years or aged under 18 years and working over 30 hours a week.
Temporary residents are also eligible for super.
Find out about your eligibility for super at the Australian Taxation Office.
Are you being paid enough?
The easiest way to check if you’re being paid right is to know your entitlements.
The ATO’s estimate my super tool can help you determine how much your employer’s super contribution should be.
The Fair Work Commission and the Fair Work Ombudsman have tools to help you find the relevant award or enterprise agreement for your workplace, which should detail the amount of super that your employer should contribute to your fund.
Voluntary contributions
Voluntary contributions can come from you, your employer from your after-tax income, or your married partner or de facto partner (when they are not your employer). These are known as ‘after-tax contributions’, as they’re made after tax is applied to your income.
Should you add to your super?
Moneysmart runs a calculator that can give you an indication of how voluntary contributions can optimise your super. If you’re not sure if you can commit, try including super as an expense item in your budget. Do you have enough breathing space for even a small contribution?
Government contributions
If you are earning a low income, you may be eligible for government contributions of up to $500 to your super. In good news, you don’t need to apply for these government super contributions. If you’re eligible and your fund has your tax file number, the government will pay it to your fund account automatically each financial year.
Who is it for?
| Low-income super tax offset | if you earn less than $37,000 a year |
| Super co-contribution | if you’re a low- or middle-income earner and make voluntary (after-tax) contributions to your super |
What if you’re self-employed?
When you don’t receive a compulsory super contribution from an employer because you’re either self-employed, a freelancer, or you’re working in the ‘gig economy’, a different set of rules apply to you.
Generally speaking, you’re not required to make contributions to a super fund – though many people still do so voluntarily to provide for the future. Plus, it’s a relatively safe way of investing a portion of your income.
What you need to know:
- freelancer or sole trader – making super contributions is up to you, it’s completely voluntary
- employed by your own company – the company is required to make super contributions on your behalf, as with all other employees
- contract work – the question of whether super should be paid by the employer is dependant on the nature of the contract
Tax and your contribution
There are also tax benefits to making super contributions if you are self-employed. You can get a tax deduction and pay just 15% tax on any contributions you make up to the annual limit.
Multiple funds and finding lost super
It’s possible to set up multiple super funds throughout your working life. If you wish to consolidate your funds into one place, you can do it through myGov.
You might wish to do this to avoid paying fees for two super funds and to keep track of your super more easily.
Withdrawing money from super
Super is geared towards the future and there are rules around when you can access it and how.
Early access
You might be able to access part of your superannuation funds before you reach retirement age in a small number of emergency circumstances, including compassionate grounds or if you’re experiencing severe financial hardship. To start the process, you must speak to your super fund about early access to super.
What are compassionate grounds?
Examples of compassionate grounds include:
- medical treatment or care at the end of life
- expenses associated with the death of a dependant
- expenses associated with disability for you or a dependant
- payment on a home loan to avoid losing your home.
What is severe financial hardship?
You need to meet two conditions to be considered for early access to super – you must have been receiving eligible government income support payments continuously for 26 weeks, and you have not been able to meet reasonable and immediate family living expenses.
Are there risks to withdrawing super?
It’s important to remember that any super you have is there for your retirement. Also, even a small amount of money in your super account will likely earn interest and build up to a much larger amount by the time you retire. So taking even a small amount out now could probably mean a large amount of lost interest.
This said, however, sometimes short-term needs must be addressed before long-term considerations when it comes to health, wellbeing and getting back on one’s feet.
In retirement
You need to meet certain eligibility requirements before you can withdraw super for retirement.
These include:
- reaching your preservation age – between 55-60 years of age, depending on your date of birth
- retirement or transition to retirement – you retire from the workforce or choose to begin a transition-to-retirement income stream while still working
- turning 65 years old – you can access your super even if you haven’t retired
What are the withdrawal options?
Once you meet the eligibility requirements, there are several options for withdrawing super:
- lump sum – receive your super as a lump sum payment
- regular income stream – set up a regular income stream to receive your super payments on a periodic basis
- combination of both – choose a combination of a lump sum and regular income stream
Do you pay tax?
The tax implications of withdrawing super depend on your age and employment status. If you’re aged over 60, your super payments will be tax-free. For everyone else still working, you may need to pay tax on your super payments.
Where to find more information
Get the details on withdrawing and using your super on the Australian Taxation Office’s website, or follow the steps at Moneysmart.gov.au’s guide to getting your super.
Who can help you with super?
When you think of super like a big savings account that you can’t access, yet, it can feel possibly less daunting. If you need help at any time, it’s out there.
Consumer rights
Your consumer rights as they relate to super are covered by the Australian Securities and Investments Commission (ASIC).
Employer not paying enough super
If the ATO finds that your employer owes you super, they will pursue any outstanding amount and allocate it to your nominated fund once collected.
You can follow these steps to check, and if you find anything, report it to the Australian Taxation Office immediately.
Making a complaint
If you feel you haven’t been treated fairly by a superannuation fund, you can make a complaint to the Australian Financial Complaints Authority (AFCA) online or call them on 1800 931 678.
AFCA is an independent agency that helps resolve disputes between people and financial institutions, companies or government agencies. It’s a free and independent service. And while the process can be lengthy, it will lead to a resolution.
This information was last updated on 5 June 2023.
The links and resources in this article have been compiled and reviewed by the Brotherhood of St. Laurence. We aren’t responsible for what you’ll find at the links, though we do hope you find the information useful. See our disclaimer if you’d like to know more.
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