How super works

Superannuation basics

If you're hoping for a comfortable life in retirement, spend some time learning about your superannuation (super). Taking a few steps now could significantly boost your super and make a big difference to your future lifestyle.

What is superannuation?

Superannuation is a tax effective way to save for your retirement. It's similar to a managed fund where your money is pooled with other members' money and invested on your behalf by professional investment managers. Generally you will not be able to access this money until you retire.

Your employer will make contributions to your super fund and you can top it up with your own money. The government may also make contributions if you are a low income earner.

How to choose a super fund

Most people can choose which super fund they'd like their super contributions paid into. Check with your employer to make sure you can choose the fund your super is paid into and see choosing a super fund for more information. Super comparison websites can help you compare super funds.

Some industrial awards specify a fund or a choice of a few funds that super must be paid into. In these cases you may have limited or no choice of fund.

When you can choose your super fund, tell your employer by filling in a standard choice form from the Australian Taxation Office (ATO) or from your employer. If you don't (or can't) choose your own super fund, your employer will put the money into a 'default' super fund, known as a MySuper account.

Insurance through super

MySuper funds have a default level of death, disability and income protection insurance that you will automatically be covered for. If you don't want this insurance you will need to tell your super fund you want to cancel it.

Insurance through super can be cheaper than similar cover outside of super and you can usually request to increase it if the default cover is not enough to suit your needs. See insurance through super for more information.

How do I make super contributions?

There are typically three types of super contributions: employer contributions, personal contributions and government contributions.

Employer super contributions

For most people, your employer must pay an amount equal to 9.5% of your salary into your super fund account. This is on top of your salary or wages. Over the course of your working life, these contributions from your employer add up, or 'accumulate', which is why they are known as accumulation funds. Your super money is invested by your super fund so you will earn investment returns on the money.

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 super. Ordinary time earnings are what you earn for 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 super guarantee.

Work out how much your employer should be paying into your super fund.

Employer contributions calculator

Super contributions if you're self-employed

If you are self-employed you are responsible for making your own super contributions, but they are tax deductible. See super for self-employed people for more information.

Personal super contributions

You can make extra contributions by:

  • Salary sacrificing - your employer can direct some of your pre-tax income into super. This will be deducted by your employer and sent to the fund with your employer contributions.
  • Personal contributions from your pay - you can also ask your employer to make personal contributions from money you have paid tax on. Low income earners who do this may be entitled to government contributions.
  • Bank transfer - you can transfer some of your savings into your super account using BPay or direct deposit. Ask your super fund for details.
  • Super transfer - transferring all or some of your super from another fund into your main super account.

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. Low income earners can receive up to an extra $500 by making personal after tax contributions.

If you earn up to $37,000 you may also get a 'low income super tax offset' of up to $500 from the government. You don't need to add extra money to your super to be eligible for this payment. Both of these payments will be paid into your super automatically after you have lodged your tax return.

What happens to my super money?

Money in your super fund account is invested by your super fund. Most super funds offer a variety of investment options. These usually include pre-mixed options that will contain a mix of different asset classes, and single sector options such as cash, property and shares.

Your investment returns will impact how quickly your super grows so it's important to choose an investment option that is appropriate for your investment timeframe and tolerance for market fluctuations. See super investment options for more information.

If you have more than one super fund you can combine them to save fees and make it easier to keep track of your super. Read more about consolidating super funds.

When you retire your super can be taken as a lump sum, a regular income stream, or 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 information.

When can I access my super?

If you retire and have reached your preservation age, you can withdraw your super. The table below shows when you can access your super, according to when you were born. Here are more details on how to get access to your super.

Your date of birth

Age you can access your super
(Preservation age)

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

Understanding how super works can help you make the most of it, 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.


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Last updated: 01 Jul 2017