Superannuation

“A system where money is placed in a fund to provide for a person's retirement.” This is how Australian Taxation Office defines Superannuation

How does it work?

If you work for a company or organisation, your employer must pay money into a super account in your name, which is then managed by a super fund. The formula used is currently 9.5% of your income, including bonuses, commissions and loadings. This is called the Super Guarantee and it's the law.

You can also add extra money to your super account, so you’ll have even more to live off when you retire.

If you’re self-employed you choose how much of your income you set aside for superannuation.

Over the course of your working life, the contributions add up and are invested by your super fund with the aim of growing them even further.

To help ensure your superannuation savings are there for you in retirement, the government places restrictions on when and how you can access your super.

When can I access my super?

Generally you need to wait until you retire. Remember you need to be at least 60 for your super to be tax free. Once you’ve retired you can then:

• Have a regular super income stream to make your retirement more comfortable
• Take out a lump sum (but take care not to spend your future!)
• Combine a regular income stream with the Government Pension

How do I apply for super?

While most employers have a default fund, you can generally ask your employer to pay your super into a fund of your choice. 

Comparing funds: List of all superannuation funds

If you’re comparing super funds, you have around 250 super funds to consider. Daunting? Perhaps, but it is important to note that there are only 5 types of super funds in Australia, and most Australians can only choose from 3 of these fund types. You can expect to find the following five broad types of super funds in Australia:

• Company (or corporate) funds
• Industry funds
• Retail funds (although you may be offered a series of funds via a ‘wrap’)
• Public sector funds (also known as government superannuation schemes)
• Small funds (two-types: self-managed super funds and small APRA. APRA stands for the Australian Prudential Regulation Authority, the main super regulator). Nearly all small funds are self-managed super funds (SMSFs)

Most Australians can only choose to join industry, retail or SMSFs. Corporate super funds and public sector funds generally require you to be an employee of the company or the public sector, respectively.