Your superannuation basics
A basic guide to what superannuation is, how to save it and what you can do to increase it.
What is superannuation?
Superannuation, often called super, is money put aside by your employer over your working life to live on when you retire from work.
Super is important for you because the more super you save, the more money you will have for your retirement.
You can only withdraw your super money in certain circumstances – for example, when you retire or turn 65 years old.
How do I save super?
For most people, your employer pays amounts called ‘contributions’ into a super account for you. This is called the ‘super guarantee’. They pay these contributions on top of your salary and wages. There are laws about how much super your employer must pay.
Generally, your employer must pay super for you if you are:
- 18 years old or over, and are paid $450 or more (before tax) in a calendar month
- under 18 years old, being paid $450 or more (before tax) in a calendar month and work more than 30 hours in a week.
This applies whether you work casual, part-time or full-time hours, and if you are a temporary resident. You may also be eligible if you are a contractor who is paid primarily for labour, even if you have an Australian business number (ABN).
How is money paid into my super?
From 1 July 2014, your employer is required to pay a minimum of 9.5% of your ordinary time earnings into super. This is set to gradually rise over the coming years.
Ordinary time earnings are what you generally earn for ordinary hours of work, including over-award payments, certain bonuses, allowances, and some paid leave. Payments for overtime hours are generally not included in ordinary time earnings.
You can also add your own money into your super savings, and sometimes the Australian Government puts money in too.
What if my employer is not paying the correct super?
Talk to your employer. Ask how often they are paying your super, into which fund they are paying it, and how much they are paying.
You can check your last Member statement from your super fund or contact the fund to confirm whether your employer has paid your super.
If you still believe your employer is not paying the super you are entitled to, you can phone the ATO on 13 10 20.
Should I be wary of promoters offering early access to super?
Beware of promoters offering various plans to gain early access to your super savings before you retire. The promoters of these plans will tell you that they can help you access your super savings for reasons such as paying off debts, buying a house or car, or even going on holiday. These schemes are illegal and heavy penalties apply if you participate.
How do I choose a super fund?
Most people can choose the super fund they want their contributions paid into. If you’re eligible, your employer must give you a Standard choice form within 28 days of the day you started working for them, so you can make that choice in writing. If you do not choose a fund, your employer will choose a fund for you.
All employers have a nominated super fund, or ‘default fund’, where they make super guarantee payments for their employees who have not selected a preferred fund.
If you want to have your contributions paid into an existing super account but can’t remember your super fund account details, check SuperSeeker for help.
Keeping track of your super savings
Making sure your super fund has your TFN will make it easier to keep track of your super, move it between accounts, and receive super payments from your employer or the government.
You can check whether your fund has your TFN by looking at the statements they send you.
Keep track of your super with SuperSeeker
If you’ve ever changed jobs, you could have super in many accounts. SuperSeeker is an online tool to help you find super savings you might have lost or forgotten about.
On SuperSeeker you can also see all of your active super accounts and their balances, and ask to move your super savings from multiple accounts into one preferred account. If we are holding any super monies on your behalf, you can also select one of your super fund accounts for us to transfer the money into.
You’ll need your TFN to do a quick search for lost super. See also:
How do I increase my super?
As well as the contributions your employer pays, you can add to your super by making your own contributions. You may be able to ‘salary sacrifice’ to super from your before-tax income, or contribute to super from your after-tax income.
If you choose to salary sacrifice contributions, your employer may make super guarantee contributions based on your new reduced salary.
There are limits called ‘caps’ on the amount you can contribute to your super each financial year without having to pay additional tax. If you contribute more than these caps, you may have to pay additional tax. If you are planning on contributing more than $25,000 to your super (including employer contributions), seek advice from a suitably qualified professional.
Government super contributions
If you’re a low-income or middle-income earner, you may be eligible for contributions from the Australian Government – the government will contribute to your super savings for you.
See also:
How do I access my super benefits?
Generally, you can access your super money when you retire. However, there are some circumstances where you can access your super savings early, such as severe financial hardship and specific medical conditions.
If you legitimately need some of your preserved super earlier, ask your super fund about whether you may be able to access it before applying.
(ATO Website)