What superannuation is
Superannuation is Australia's compulsory retirement savings system. Your employer is required by law to contribute a percentage of your salary into a super fund on your behalf. That money is invested over your working life and becomes available when you retire.
The system was introduced in 1992 with an initial contribution rate of 3%. The rate has increased in stages since then, reaching the legislated final rate of 12% from 1 July 2025 (FY2025-26). The rate is expected to remain at 12% under current law.
Super is not a government pension. It is your money, held in trust by a super fund and invested on your behalf. The government does not control it, and it does not disappear if you change jobs.
Employer contributions
Your employer must pay the Superannuation Guarantee (SGC) into a complying super fund at least quarterly. The contribution is calculated as a percentage of your Ordinary Time Earnings (OTE), which includes base salary, casual loadings, and some allowances, but excludes overtime and some other payments.
On a salary of $80,000 with a 12% SGC rate, your employer contributes $9,600 per year into your super. On $120,000, the contribution is $14,400. This is on top of your salary — it is not deducted from your take-home pay.
You can generally choose your own super fund. If you do not, your employer pays into either the fund nominated in an enterprise agreement or a default fund meeting certain standards.
How your money is invested inside super
Super funds invest contributions into a mix of assets — shares, property, bonds, cash, and alternatives. You typically choose from a range of investment options when you join a fund. Common options include:
- Growth. Typically 80-90% in growth assets (shares, property). Higher expected long-run returns, more volatility.
- Balanced. Around 60-70% in growth assets, the remainder in defensive assets like bonds and cash. Lower volatility than growth.
- Conservative. Mostly defensive assets. Lower expected returns, lower volatility. More suited to investors close to retirement.
- Cash. Held in cash or short-term deposits. Minimal return, no investment risk. Generally only appropriate as a short-term strategy.
Investment earnings inside super are taxed at 15% in the accumulation phase (while you are working). This is lower than most people's marginal tax rate on personal investment income.
When you can access super
Super is generally inaccessible until you reach your preservation age and meet a condition of release. The preservation age for those born after 30 June 1964 is 60.
Conditions of release include retiring, reaching age 65 (regardless of work status), or transitioning to retirement (which allows access via a Transition to Retirement income stream). Some early-access provisions exist for severe financial hardship, specific medical conditions, or compassionate grounds, but these are exceptions.
Once in retirement and accessing a super pension, investment earnings are taxed at 0%. This makes super one of the most tax-effective vehicles available for retirement savings.
Types of super funds
- Industry funds. Not-for-profit funds historically associated with specific industries (though most are now open to anyone). Often have lower fees and competitive investment performance.
- Retail funds. Run by financial institutions (banks, insurers). Tend to have a wider range of investment options, including direct share investment, but often higher fees.
- Self-Managed Super Funds (SMSFs). Funds you run yourself with up to six members (typically family). You control investment decisions but are responsible for all compliance and administration. Typically only worth the complexity and cost for balances above $200,000-$300,000.
- Corporate funds. Employer-sponsored funds for employees of specific companies. Sometimes offer negotiated fee rates or employer-specific insurance terms.
Common misconceptions
"The government controls my super"
Super is your money, held by a trustee (the fund) on your behalf. The government sets the rules for the system but does not control or have access to your individual super balance.
"I'll just rely on the Age Pension"
The Age Pension provides a basic income for eligible retirees, but it is means-tested and designed as a safety net, not a comfortable retirement income. The maximum Age Pension rate for a single person in 2025 is around $29,000 per year. ASFA's "comfortable" retirement standard for a single person is around $52,000 per year.
"Super is just a savings account"
Super is invested, not just stored. Choosing a poorly matched investment option (such as keeping a large balance in cash for decades) can significantly reduce the retirement balance compared to a growth option.
Frequently asked questions
How do I find my super fund?
If you are unsure which fund your super is in, you can check through MyGov by linking your ATO account. This also shows any lost super, which can be consolidated.
What fees should I watch for?
Key fees include the administration fee (often a flat monthly amount plus a percentage of balance), the investment fee (a percentage of assets), and performance fees (some funds charge these on positive returns above a benchmark). The ATO's YourSuper comparison tool lets you compare funds by fee and performance.
What happens to my super if I die?
Super does not automatically form part of your estate. It is paid to your beneficiaries based on a binding or non-binding death benefit nomination. Without a valid nomination, the trustee decides who receives the benefit. Nominating beneficiaries is important and often overlooked.
Can I have multiple super funds?
Yes, but having multiple funds often means paying multiple sets of fees, which reduces your net balance over time. Consolidating into one fund (after checking for insurance implications) is usually more efficient. The ATO's MyGov super consolidation tool makes this straightforward.
Project your super balance to retirement with the Superannuation Calculator. To see how extra contributions could grow your balance, try the Salary Sacrifice Calculator.