What is superannuation?

Who is eligible for superannuation?

All workers aged between 18 and 70 are entitled to be paid super by their employer if they’re earning more than $450 in a calendar month. It doesn’t matter whether you’re employed as a casual, part-time, or full-time worker, your employer has a legal obligation to pay super.

Employers must also pay super to people who are under 18 and working more than 30 hours per week.

How super works

Your employer pays a percentage of your salary into a superannuation account in your name. At the moment the minimum superannuation employers must pay for eligible employees is 10.5% of their ordinary earnings, but this super guarantee rate, opens in new window may change in the future.

After your employer makes super contributions for you, the super fund invests the money. It will accumulate in your super account for the duration of your working life and is typically available for you to access when you retire . It’s essentially like forced savings for when you retire.

Choosing a superannuation account 

Most people are eligible to choose their own super fund, but if you don’t specify your choice to your employer, your super will be paid into their nominated super fund. When you start a new job, your employer should give you a Superannuation Standard Choice Form to nominate which fund you’d like your super paid into. If your employer doesn’t provide you this form, make sure you ask them.

You don’t need to choose a new super fund each time you start a new job. When you swap jobs, your superannuation can be paid into your existing super fund. 

What happens if I have multiple superannuation accounts?

If you find you have multiple superannuation accounts across different funds, you might want to consider whether consolidating your accounts into one account benefits you. Keeping just one super fund may make it easier to keep track of your super balance. It will also mean that you’ll only pay one set of fees and charges.

If you think you have more than one super account and you want to look at consolidating your super you can do this by logging in to your MyGov, opens in new window account and going to the ATO section to view the superannuation accounts you hold.

Keeping track of your super

Every so often, you should check your payslips and your superannuation account transaction records to make sure you’re getting the contributions you’re legally entitled to. 

It’s also worthwhile paying attention to how your super fund is performing or whether it’s still the right fund for you. The ATO has a great Super Comparison Tool, opens in new window which can show you how your super fund compares to other funds when it comes to fees and net returns.

Making voluntary contributions to grow your super

You can grow your super by making extra payments yourself. Even small amounts add up over time and may save you money that you pay in tax. You should remember though that once you make contributuons to you super, you won’t be able to access this money until you retire.

Pre-tax super contributions 

You can ask your employer to pay part of your pre-tax salary into your super account (salary sacrificing). These payments, known as concessional contributions, are taxed at 15% - less than most people’s marginal tax rate.

After-tax super contributions 

You can also make contributions to super from your after-tax pay. These are known as non-concessional contributions as you have already paid tax on this money. 

Whether you make pre-tax or after-tax super contributions there are voluntary contribution limits, opens in new window that apply. If you’re thinking of making significant contributions, you should check with the ATO or get expert advice, so you don’t get caught out paying unexpected tax.

Taking control of your financial future

Learning early in life to manage money, save and plan for the future will help set you up for financial success. Check out banking for young adults for a range of tools, guides and resources.