How super works
If you want enough money for a comfortable retirement, spend
some time learning about superannuation. Taking a few steps now to
boost your super will make a huge difference to your lifestyle in
What is super?
The more you save the sooner you can stop working.
Superannuation is a way to save for your retirement. The money
comes from contributions made into your super fund by your employer
and, ideally, topped up by your own money. Sometimes the government
will add to it through co-contributions and the low income super
Your employer must pay 9.5% of your salary into a super fund.
This is called the Super Guarantee and it's the law. The Super
Guarantee will gradually increase to 12% in coming years.
Over the course of your working life, these contributions from
your employer add up, or 'accumulate'. Your super money is also
invested by your super fund so it grows over time. When you retire,
you will have money to live off - a nest egg. Super is a lifetime
investment that has many benefits.
Super is changing
Superannuation law is changing over the next few years.
To find out more about the changes see ASIC: Stronger Super.
Save for your retirement
Start saving for your retirement early. The longer you have to
save, the more chance your savings have to grow. Use our retirement
planner to find out if your super savings are on track.
Enjoy tax advantages
For most people, super will be taxed at a lower rate than a
similar investment outside super.
Receive bonus contributions from the government
If you put your own after-tax money into super, you could
receive a government co-contribution,
depending on how much money you earn. See contributing extra to
If you earn up to $37,000 you may also get a 'low income super
contribution' of up to $500 from the government. You will get this
payment whether or not you add extra money to your super. See low income super
Get cheaper insurance
You may be able to get death, disability or income protection insurance through your
super account at a cheaper price than if you bought it outside of
super. See insurance through super.
How to choose a super
Most people can choose which super fund they'd like their super
contributions paid into. If you want to choose your super fund,
tell your employer by filling in a
Standard choice form from the Australian Taxation Office (ATO)
or from your employer.
In some cases your employer will decide which fund your super is
paid into. If you don't (or can't) choose your super fund, your
employer will put the money into a 'default' super fund, a
fund nominated under an industrial award or by your
See choosing a super fund for more
For most people, your employer must pay an amount equal to 9.5%
of your salary into your super fund account.
It's important that you get paid what's rightfully yours. The
9.5% employer contributions are based on your 'ordinary
time earnings'. For example, if your ordinary time earnings are
$50,000 then you should be paid an additional $4,750 into
Ordinary time earnings are what employees earn for their
ordinary hours of work including over-award payments, bonuses,
commissions, allowances and certain paid leave. See the ATO's
information on using ordinary time earnings to calculate the
You can make extra contributions by:
- Putting some of your savings into your super account
- Asking your employer to deduct extra money from your pay
(before tax is taken out) and pay this into your super account -
this is called contributing extra to
- Transferring super from another fund into your main super
account on a regular basis
For self-employed people, your super contributions may be tax
What happens to your super
Money in your super fund account is invested by your super fund.
Most super funds offer a variety of investment options.
For example, if you choose a market-linked investment, the value of
your super will move up and down with market movements. Or you
might select a stable option with lower expected returns but fewer
ups and downs.
You can choose how you'd like your money invested, if you want
to. You can also transfer your money to a different investment
option within the fund, or transfer to another super fund at any
See super investment options for
Maximise super when you
If you retire and have reached your preservation age
(i.e. 55 to 60), you can withdraw your super. There are three ways
you can get your super:
- As a lump sum
- As a retirement income stream (e.g. a monthly payment)
- A combination of both
If you choose to take your super as a retirement income stream,
the money that you're not accessing continues to work for you and
earn interest. See income from super for more
Understanding how super works can bring great
benefits whether you are just starting out, are close to retirement
or have already retired. Learn the basics and you can become your
own super hero.
Last updated: 08 Jul 2015
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