Australia’s superannuation system is designed to help people save money to prepare for retirement. By putting money aside over the course of their careers, Australians can be more confident that they’ll have the financial security in retirement to enjoy a more comfortable lifestyle, with or without an age pension.
Australians have a wide range of superannuation options to choose from, including default super funds and self-managed super funds, all managed by a diverse array of superannuation companies. Different super options have different superannuation rates, investment options, fees, features and benefits. The best super option for you may depend on a range of factors, from your income and financial situation to your future retirement plans.
What are Australia’s superannuation rules?
Superannuation laws and regulations are complex, but there are three important rules for everyday Australians to remember:
- Australian employers must pay a percentage of each employee’s pre-tax income into a superannuation fund. Employees can also add more contributions of their own if they so choose.
- This money must stay in the super fund until you reach a certain age and retire – you can’t withdraw your super early except in certain emergency circumstances.
- Retired Australians can access money from their super fund as either a single lump sum or as an income stream to support their lifestyle.
Exceptions apply – contact the Australian Tax Office (ATO) and/or Department of Human Services (DHS) for more information.
What is the minimum superannuation contribution in Australia?
Australia’s minimum superannuation contribution is presently 9.5% of your pre-tax income. This superannuation rate is due to increase over the coming years:
Super guarantee percentage
| Period | General super guarantee (%) |
|---|---|
| 1 July 2002 - 30 June 2013 | 9.00 |
| 1 July 2013 - 30 June 2014 | 9.25 |
| 1 July 2014 - 30 June 2015 | 9.50 |
| 1 July 2015 - 30 June 2016 | 9.50 |
| 1 July 2016 - 30 June 2017 | 9.50 |
| 1 July 2017 - 30 June 2018 | 9.50 |
| 1 July 2018 - 30 June 2019 | 9.50 |
| 1 July 2019 - 30 June 2020 | 9.50 |
| 1 July 2020 - 30 June 2021 | 9.50 |
| 1 July 2021 - 30 June 2022 | 10.00 |
| 1 July 2022 - 30 June 2023 | 10.50 |
| 1 July 2023 - 30 June 2024 | 11.00 |
| 1 July 2024 - 30 June 2025 | 11.50 |
| 1 July 2025 - 30 June 2026 | 12.00 |
| 1 July 2026 - 30 June 2027 | 12.00 |
| 1 July 2027 - 30 June 2028 and onwards | 12.00 |
Source: ATO
If you’re self-employed, you aren’t obliged to make minimum superannuation contributions, though depositing money into your super fund can help you prepare for retirement, and may have additional tax benefits.
When can you access your superannuation in Australia?
To make a superannuation withdrawal in Australia, you need to have reached your “preservation age” and have retired.
Preservation age based on date of birth
| Date of birth | 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 |
Source: ATO
Depending on your circumstances, you can choose to withdraw your superannuation all at once as a lump sum, regularly withdraw small amounts as an income stream, or split the difference by doing both (withdrawing part of your super balance as a lump sum and using the remainder as an income stream).
Depending on your financial circumstances, the amount of super you withdraw and use may affect your ability to receive an age pension from the government – you can learn more from an accountant or the Department of Human Services.
There are some exceptional circumstances where you can withdraw money from your superannuation fund early, before you retire, such as if you’re facing permanent medical incapacitation or severe financial hardship. It’s worth carefully considering whether withdrawing your super early may be the best option for you.
Can you take your super if you leave Australia?
Australian citizens who leave the country to move permanently overseas are still subject to the same superannuation rules as other Australians – you still need to wait until you reach retirement age and stop working before you can access the super in your fund.
Temporary Australian residents may be able to take their superannuation with them when they return home by applying for a departing Australia superannuation payment (DASP) after they leave the country – see the ATO for details.
Can you use your super to purchase a house?
In most circumstances you can’t use the money in your superannuation fund to buy a house, though there are exceptions:
- If you retire and access your superannuation as a lump sum, you may be able to use this money to buy a house, or as a deposit on a home loan. Keep in mind that some banks and lenders have maximum age limits on their home loans, as well as income restrictions (e.g. not counting pension income when calculating if you can afford the repayments), so mature Australians may find it more difficult to successfully apply for a mortgage.
- People with a Self-Managed Super Fund (SMSF) may be able to use their superannuation to purchase property, though only as an investment, not as a home for themselves or their friends or family. Money made from this investment property can then be reinvested in the SMSF, further growing their wealth for retirement.
- The First Home Super Saving Scheme (FHSSS) is a government program that lets Australians make extra contributions into their super fund with the goal of saving a deposit on their first home. You can apply to have a maximum of $15,000 of voluntary contributions per financial year (up to a total of $30,000) released to help pay for a first home deposit.
How much super do you need to retire in Australia?
The amount of money you will need to retire in Australia will depend on the type of lifestyle you hope to enjoy in retirement, as well as whether you hope to make use the government’s age pension.
The Association of Superannuation Funds of Australia offers the following retirement standard guidelines:
Budgets for various households and living standards (March quarter 2018, national)
| 65 year old singles | 65 year old couples | 85 year old singles | 85 year old couples | |
|---|---|---|---|---|
| Modest lifestyle | $27,368 | $39,353 | $25,841 | $36,897 |
| Comfortable lifestyle | $42,764 | $60,264 | $40,636 | $56,295 |
Source: Association of Superannuation Funds of Australia - assumes that the retirees own their own home outright and are relatively healthy
Based on these standards, you can estimate how much money you’ll need to have available in your super fund by the time you retire to access the annual income required to pay for the lifestyle you want. Keep in mind that your access to super and other assets may affect your eligibility for an age pension.
