Superannuation is Australia’s long-term savings vehicle for retirement.
Through the Superannuation Guarantee, employers are obliged to make contributions to super funds on behalf of their employees’ at a minimum rate of nine per cent of salary. This money cannot be accessed until you retire, or certain other conditions are met.
Australia’s compulsory system of superannuation aims to ensure more people can have a comfortable retirement and, as the population ages, take the pressure of the government-funded age pension.
Australia’s compulsory system of superannuation aims to ensure more people can have a comfortable retirement
The Australian superannuation system provides ballast for the Australian economy with super funds invested in a range of assets including shares, infrastructure, real estate, cash and bonds.
For individuals, superannuation offers other benefits including:
- Tax advantages: super generally offers lower tax rates on contributions and investment earnings than similar investments outside of super. This makes super a much more tax effective way to save for retirement.
- Income if you are unable to work: super may be used to supplement the Disability Pension if you become disabled and unable to work before retirement.
- Low-cost insurance: many super funds offer life, total and permanent disability, and income protection insurance cover during a worker’s life.
- Bonuses from the Government: if you’re a low or middle-income earner and make your own after-tax contributions to super, you could also receive money from the Government towards your super.
What are you entitled to?
Most people working in Australia are entitled to be paid the Superannuation Guarantee (SG) by their employer. The SG is a compulsory arrangement introduced by the Government to ensure every Australian has some form of savings for retirement.
Legally, your employer must pay a minimum of nine per cent of your salary into a superannuation fund or a Retirement Savings Account (RSA) at least quarterly. You are also entitled to make your own contributions to your super account up to a certain limit. Super Guru has more about contributions.
You may have the right to choose which fund your super goes into. You can also choose how your super fund invests your savings.
Generally, once you reach what is known as the preservation age (this varies depending on when you were born) and retire from the workforce, resign from a job on reaching the age 60, or once you turn 65 - you are entitled to access your superannuation savings.
Up until this time, there are very limited circumstances under which you can access your super.
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