Superannuation in Australia is a system that encourages people in the country to save money for retirement, usually from the time they start working, so that they can have a regular income later in life. The employer contributes a percentage of the employee’s income before tax to the employee’s super account. The more a person saves, the more they will have for retirement.

The contributions increase over a period of time, and are invested by the super fund.

According to the website of the Australian Taxation Office: “Superannuation, or ‘super’, is money put aside by your employer over your working life for you to live on when you retire from work.”

“You can only withdraw your super money in certain circumstances – for example, when you retire or turn 65 years old,” it adds.

It further explains that for most people, the “employer pays money – ‘contributions’ – into a super account” for them – this is called the ‘super guarantee’. These contributions are paid on top of the employee’s salary and wages. There are laws governing how much super the employer must pay.

The websites states that generally, the employer must pay super if the person is:

• 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 is applicable whether the employee works “casual, part-time or full-time hours, and if you are a temporary resident”. And, “you may also be eligible if you are a contractor who is paid primarily for labor, even if you have an Australian business number (ABN).”

“From 1 July 2014, your employer is required to pay a minimum of 9.5% of your ordinary time earnings into super,” it states. Further, people can also add their own money into their super savings, “and sometimes the Australian Government puts money in too.”

Superannuation system in Australia has tax benefits, and the government has set standards for employee contributions and management of superannuation funds.

In KPMG’s Super Insights Report 2018 on the impact of regulatory changes, and technology on the sector, Paul Howes, Partner and National Sector Leader, Asset and Wealth Management writes in the foreword: “Despite ongoing regulatory focus, legislative changes and media attention, Australia’s superannuation system continues to deliver strong outcomes for members.”

Funds, on the whole, delivered strong investment returns to members, he wrote.

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