Superannuation basics – understanding super
23 June 2022
5
min read
At some point you may rely on your super as a primary source of income, so learning about it now may help ensure you're well placed financially when you retire.
Superannuation, or super, is a compulsory scheme where a person has money paid by their employer to a super fund so they are financially supported when they retire from the workforce.
Superannuation in Australia
As an Australian, your retirement income may be made up of a combination of your personal savings, the Age Pension from the Australian Government, and your super.
Superannuation in Queensland started with an Act of Parliament in 1912 that gave a retirement pension to public servants. However, it didn't become compulsory for all employers to pay superannuation for their employees until 1992 when the Superannuation Guarantee was introduced.1
How do employer super contributions work?
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While you’re working, as of 1 July 2022 your employer is legally required to put a minimum of 10.5% of your regular wage or salary into your super fund. This is known as the Superannuation Guarantee and is an extra payment on top of your regular wages or salary. Some employers, including the Queensland Government, may make higher contributions to your super.
Most people are able to choose which super fund they want their employer to contribute to and retain that fund, if they so desire, when they change jobs. Over the course of your working life, these funds should grow with regular contributions. Your super fund will also invest your money, giving you investment returns on your super.
If you’re self-employed, you can make your own super contributions, which are tax deductible.
How can I grow my super?
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If you feel like the 10.5% employer contributions are not enough, you can add more money to your super fund in a variety of ways.
These can include:
- Sacrificing some of your pre-tax salary (your salary before tax is taken out) into your super account, in what’s known as salary sacrifice. This may have certain tax benefits, as well as steadily grow your retirement savings.
- Making voluntary after-tax super contributions (using money direct from your personal bank account). This can not only boost your super, but is also something you may be able to claim a tax deduction on, meaning you can potentially get back money at tax time.
- Contributing to your spouse’s super account,to support them while they support you, if eligible. This may also have certain tax benefits.
- Keep in mind there are limits on these contributions.
Another way to make sure you’re maximising your super is to consider consolidating it into one fund. This can help you keep track of how you’re progressing towards retirement, and importantly help you save on fees across multiple funds.2
How do I access my super?
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Generally, taking money out of your super fund isn’t possible until you reach your preservation age (see table below)3, and permanently retire. Your benefits are generally preserved until you meet a condition of release.
| Date of birth |
Age you can access your super |
| Before 1 July 1960 |
55 |
| 1 July 1960 - 30 June 1961 |
56 |
| 1 July 1961 - 30 June 1962 |
57 |
| 1 July 1962 - 30 June 1963 |
58 |
| 1 July 1963 - 30 June 1964 |
59 |
| From 1 July 1964 |
60 |
If you’re between your preservation age and 64, and still want to work, you can use some of your super while you’re working, via a QSuper Transition to Retirement Income account. This can help you reduce your work hours without reducing your income and also ease you into life after work.
If you’re between your preservation age and 64, and decide to go back to work after retiring, you can access what super you’ve accumulated so far. However, you will need to wait until your employment ends or you’re 65 before accessing any new contributions.
There are cases where you can access your super early, but these circumstances are very limited, such as:
- Permanent or temporary incapacity
- Severe financial hardship
- Terminal medical condition
- Compassionate grounds.
Find out more about having early access to your super.
How do I choose an Australian super fund?
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Once you have a broad understanding of the basics of super and how it can work for you, the next step is figuring out which Australian super fund is right for your needs. Finding the best super fund for you can be a difficult process, as it plays a crucial part in what your retirement might look like.
There’s a lot of factors to consider during your choice, including:
- Fees
- Investment options
- Performance over a long period of time
- Potential insurance cover.
Australian Retirement Trust is the super fund formed through the merger of QSuper and Sunsuper.
We’re one of Australia’s largest super funds and proud to take care of over $200 billion in retirement savings for more than two million members.
We’re committed to returning profits to members as lower fees and better services, as the less you pay in fees on your super account the more you could have to live your best retirement.
1. Parliament of Australia, Chronology of superannuation and retirement income in Australia, accessed 7 June 2022, at aph.gov.au
2. Before you consolidate your super, please consider if the timing is right and if you will lose access to benefits such as insurance or pension options, or if there are exit penalties/fees or tax implications.
3. Australian Tax Office, When you can access your super, accessed 7 June 2022 at ato.gov.au