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.

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Learn more about superannuation

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.

What is the minimum superannuation contribution in Australia?

Australia’s minimum superannuation contribution is based on the superannuation guarantee, which is presently 9.5% of your pre-tax income. According to the ATO, you or your employees are eligible for the superannuation contribution if:

  • An employee earns $450 or more before tax in a calendar month
  • An employee is under 18 or is a private domestic worker (such as a nanny) and works more than 30 hours per week.

This superannuation rate is due to increase over the coming years to around 12.00%. 

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.

If you're unsure whether you qualify, or are self-employed and want more information on superannuation contributions, it may be worth speaking to an accountant or financial adviser for personalised financial advice. The Australian Securities & Investments Commission (ASIC) has created the Financial Advisers Registry to help Aussies ensure they're choosing a reputable adviser for their financial services.

What are the benefits of superannuation funds?

Thinking about the future and setting yourself up for a comfortable retirement is not a common thought for most Aussies starting their first jobs in their teen years. But, the super account you choose matters, and many workers find themselves with one or multiple funds opened in their names by employers over the years. 

This is why it can be invaluable to take time out and choose the most competitive superannuation fund for your financial needs and future. Some of the benefits of choosing your own superannuation fund include:

  • Industry super funds. You may choose to aligning your nest egg with a fund within your industry (i.e. hospitality worker choosing a hospitality super fund).
  • Avoiding admin fees. As no one can predict the future, one of the best ways to try and get a high investment return is to pick one with the lowest percentage of fees. 
  • Investment strategy. Some funds allow you to decide the diversification of your investment portfolio, with options chosen by your super fund. You may also opt to decide your own investment strategy via a self-managed super fund (SMSF). 
  • Risk level. Choose from lower risk, medium risk and higher risk investment options. The lower risk models may result in lower returns but greater stability over the life of your super. Higher-risk options may result in higher immediate returns, but are subject to market fluctuation. 
  • Insurances. Many superannuation funds offer customers life insurances and income protections that are factored into your ongoing fees. You may want to choose a super fund that also has a life insurance policy that best suits your financial situation and household.

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.gov.

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.

Can I withdraw my super early in Australia?

There are some exceptional circumstances where you can make an early release from your superannuation fund, before you retire.

According to the ATO, these are some of the conditions of release of super on compassion grounds:

  • "Medical treatment and medical transport for you or your dependant
  • Palliative care for you or your dependant
  • Making a payment on a home loan or council rates so you don't lose your home
  • Accommodating a disability for you or your dependant
  • Expenses associated with the death, funeral or burial of your dependant"

If you're struggling financially, you may be able to withdraw some of your super if you meet both these conditions, according to the ATO:

  • "You have received eligible government income support payments continuously for 26 weeks; and
  • You are not able to meet reasonable and immediate family living expenses."

Keep in mind that if you withdraw super early for reasons of financial hardship, it is taxed as a super lump sum. The minimum amount you can withdraw is $1,000 and the maximum is $10,000. If your balance is less than $1,000, you may withdraw your remaining balance after tax.

There are other reasons you may be eligible for early release that may or may not fall into the above categories including:

  • Financial impacts of COVID-19/Coronavirus 
  • If your superannuation balance is under $200
  • To purchase a home through the First Home Super Saver scheme
  • To pay for IVF treatments 

If you're considering early release of super funds for reasons outside of compassionate and financial necessity, keep in mind you may be setting yourself up for greater financial issues in later years. Any money you take out of your super will not only lower your balance, but lessen your return as superannuation interest is compounded.

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

However, it's important to note that temporary resident super balances are generally taxed upon leaving the country. It is not common to leave with the full superannuation balance you earned in your time here.

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 savings standard guidelines:

  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. If this number isn't where you want it to be, if you're a few years away from retirement you may be able to bolster your retirement income now through salary sacrificing. 

You may be able to supplement your lifestyle with your superannuation funds, any additional income earned from assets, and your pension funds. Keep in mind that your access to your super and other assets may affect your eligibility for an age pension.

Frequently asked questions

How do you access superannuation?

Accessing your superannuation is a simple administrative procedure – you just ask your fund to pay it. You can access your superannuation in three different ways:

  • Lump sum
  • Account-based pension
  • Part lump sum and part account-based pension

However, please note that your superannuation fund will only be able to make a payout if you meet the ‘conditions of release’. The conditions of release say you can claim your super when you reach:

  • Age 65
  • Your ‘preservation age’ and retire
  • Your preservation age and begin a ‘transition to retirement’ while still working

The preservation age has six different categories:

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

There are also seven special circumstances under which you can claim your superannuation:

  • Compassionate grounds
  • Severe financial hardship
  • Temporary incapacity
  • Permanent incapacity
  • Superannuation inheritance
  • Superannuation balance under $200
  • Temporary resident departing Australia

When can I access my superannuation?

You can withdraw your superannuation when you meet the ‘conditions of release’. The conditions of release say you can claim your super when you reach:

  • Age 65
  • Your ‘preservation age’ and retire
  • Your preservation age and begin a ‘transition to retirement’ while still working

The preservation age – which is different to the pension age – is based on date of birth. Here are the six different categories:

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

A transition to retirement allows you to continue working while accessing up to 10 per cent of the money in your superannuation account at the start of each financial year.

There are also seven special circumstances under which you can claim your superannuation:

  • Compassionate grounds
  • Severe financial hardship
  • Temporary incapacity
  • Permanent incapacity
  • Superannuation inheritance
  • Superannuation balance under $200
  • Temporary resident departing Australia

 

How do you open a superannuation account?

Opening a superannuation account is simple. When you start a job, your employer will give you what’s called a ‘superannuation standard choice form’. Here’s what you need to complete the form:

  • The name of your preferred superannuation fund
  • The fund’s address
  • The fund’s Australian business number (ABN)
  • The fund’s superannuation product identification number (SPIN)
  • The fund’s phone number
  • A letter from the fund trustee confirming that the fund is a complying fund; or written evidence from the fund stating it will accept contributions from your new employer; or details about how your employer can make contributions to the fund

You might want to provide your tax file number as well – while it’s not a legal obligation, it will ensure your contributions will be taxed at the (lower) superannuation rate.

What superannuation details do I give to my employer?

When you start a job, your employer will give you what’s called a ‘superannuation standard choice form’. Here’s what you need to complete the form:

  • The name of your preferred superannuation fund
  • The fund’s address
  • The fund’s Australian business number (ABN)
  • The fund’s superannuation product identification number (SPIN)
  • The fund’s phone number
  • A letter from the fund trustee confirming that the fund is a complying fund; or written evidence from the fund stating it will accept contributions from your new employer; or details about how your employer can make contributions to the fund

You should also provide your tax file number – while it’s not a legal obligation, it will ensure your contributions will be taxed at the (lower) superannuation rate.

Can I choose a superannuation fund or does my employer choose one for me?

Most people can choose their own superannuation fund. However, you might not have this option if you are a member of certain defined benefit funds or covered by certain industrial agreements. If you don’t choose a superannuation fund, your employer will choose one for you.

Can I transfer money from overseas into my superannuation account?

Yes, you can transfer money from overseas into your superannuation account – under certain conditions. First, you must provide your tax file number to your fund. Second, if you are aged between 65 and 74, you must have worked at least 40 hours within 30 consecutive days in a financial year. (Australians under 65 aren’t subject to a work test; Australians aged 75 and over cannot receive contributions to their superannuation account.)

Money transferred from overseas will generally count to both your concessional contributions limit and your non-concessional contributions limit. You will have to pay income tax on the applicable fund earnings component of any money transferred from overseas. You might also be liable for excess contributions tax.

Can I buy a house with my superannuation?

First home buyers are the only people who can use their superannuation to buy a property. The federal government has created the First Home Super Saver Scheme to help first home buyers save for a deposit. First home buyers can make voluntary contributions of up to $15,000 per year, and $30,000 in total, to their superannuation account. These contributions are taxed at 15 per cent, along with deemed earnings. Withdrawals are taxed at marginal tax rates minus a tax offset of 30 percentage points.

Voluntary contributions to the First Home Super Saver Scheme are not exempt from the $25,000 annual limit on concessional contributions. So if you pay $15,000 per year into the First Home Super Saver Scheme, you have to make sure that you don’t receive more than $10,000 in superannuation payments from your employer and any salary sacrificing.

How does the age pension work?

Most Australians who are of retirement age can qualify for the age pension. However, depending on the size of your assets and post-retirement income, you might be entitled to only a reduced pension. In some instances, you might not be entitled to any pension payments.

How is superannuation regulated?

The Australian Prudential Regulation Authority (APRA) regulates ordinary superannuation accounts. Self-managed superannuation funds (SMSFs) are regulated by the Australian Taxation Office.

What is superannuation?

Superannuation is money set aside for your retirement. This money is automatically paid into your superannuation fund by your employer.

How much is superannuation in Australia?

Superannuation in Australia is currently 9.5 per cent – which means that your employer must pay you superannuation equivalent to 9.5 per cent of your salary.

The ‘superannuation guarantee’, as it is known, has been at 9.5 per cent since the 2014-15 financial year. It is scheduled to rise to 10.0 per cent in 2021-22, 10.5 per cent in 2022-23, 11.0 per cent in 2023-24, 11.5 per cent in 2024-25 and 12.0 per cent in 2025-26.

What are the age pension's age rules?

Australians must be aged at least 65 years and 6 months to access the age pension. This eligibility age is scheduled to increase according to the following schedule:

Date Eligibility age
1 July 2019 66 years
1 July 2021 66 years and 6 months
1 July 2023 67 years

What are personal contributions?

A personal contribution is when you make an extra payment into your superannuation account. The difference between personal contributions and salary sacrifices is that the former comes out of your after-tax income, while the latter comes out of your pre-tax income.

How much superannuation should I have at age 40?

The amount of superannuation you should have at age 40 is based on how much money you need to have at retirement. That, in turn, is based on how much money you expect to spend each week during your retirement. That, in turn, depends on whether you expect to lead a modest retirement or a comfortable retirement.

The Association of Superannuation Funds of Australia (ASFA) estimates you would need the following amount per week:

Lifestyle Singles Couples
Modest $465 $668
Comfortable $837 $1,150

Here is the superannuation balance you would need to fund that level of spending:

Lifestyle Singles Couples
Modest $50,000 $35,000
Comfortable $545,000 $640,000

These figures come from the March 2017 edition of the ASFA Retirement Standard.

The reason people on modest lifestyles need so much less money is because they qualify for a far bigger age pension.

Here is how ASFA defines retirement lifestyles:

Category Comfortable Modest Age pension
Holidays One annual holiday in Australia One or two short breaks in Australia near where you live Shorter breaks or day trips in your own city
Eating out Regularly eat out at restaurants. Good range and quality of food Infrequently eat out at restaurants. Cheaper and less food Only club special meals or inexpensive takeaway
Car Owning a reasonable car Owning an older, less reliable car No car – or, if you do, a struggle to afford the upkeep
Alcohol Bottled wine Casked wine Homebrew beer or no alcohol
Clothing Good clothes Reasonable clothes Basic clothes
Hair Regular haircuts at a good hairdresser Regular haircuts at a basic salon Less frequent haircuts or getting a friend to do it
Leisure A range of regular leisure activities One paid leisure activity, infrequently Free or low-cost leisure activities
Electronics A range of electronic equipment Not much scope to run an air conditioner Less heating in winter
Maintenance Replace kitchen and bathroom over 20 years No budget for home improvements. Can do repairs, but can’t replace kitchen or bathroom No budget to fix home problems like a leaky roof
Insurance Private health insurance Private health insurance No private health insurance

 

 

How is superannuation calculated?

Superannuation is calculated at the rate of 9.5 per cent of your gross salary and wages. So if you had a salary of $50,000, your superannuation would be 9.5 per cent of that, or $4,750. This would be paid on top of your salary.

The ‘superannuation guarantee’, as it is known, has been at 9.5 per cent since the 2014-15 financial year. It is scheduled to rise to 10.0 per cent in 2021-22, 10.5 per cent in 2022-23, 11.0 per cent in 2023-24, 11.5 per cent in 2024-25 and 12.0 per cent in 2025-26.

Is superannuation taxed?

Superannuation is taxed. It is generally taxed at 15 per cent. However, if you earn less than $37,000, you will be automatically reimbursed up to $500 of the tax you paid. Also, if your income plus concessional superannuation contributions exceed $250,000, you will also be charged Division 293 tax. This is an extra 15 per cent tax on your concessional contributions or the amount above $250,000 – whichever is lesser.

Am I entitled to superannuation if I'm a contractor?

As a contractor, you’re entitled to superannuation if:

  • The contract is mainly for your labour
  • You’re over 18 and earn more than $450 before tax in a calendar month
  • You’re under 18, you work more than 30 hours per week and you earn more than $450 before tax in a calendar month

Please note that you’re entitled to superannuation even if you have an Australian business number (ABN).

What is the difference between accumulation and defined benefit funds?

A majority of Australians are in accumulation funds. These funds grow according to the amount of money invested and the return on that money.

A minority of Australians are in defined benefit funds – many of which are now closed to new members. These funds give payouts according to specific rules, such as how long the worker has been with their employer and their final salary before they retired.

How do I choose the right superannuation fund?

Different superannuation funds charge different fees, offer different insurances, offer different investment options and have different performance histories.

So you need to ask yourself these four questions when comparing superannuation funds:

  • How many fees would I have to pay and what would they cost?
  • What insurances are available and how much would they cost?
  • What investment options does it offer? How would they match my risk profile and financial needs?
  • How have these investment options performed historically?

What is MySuper?

MySuper accounts are basic, low-fee accounts. If you don’t nominate a superannuation fund, your employer must choose one for you that offers a MySuper account.

MySuper accounts offer two investment options:

  1. Single diversified investment strategy

Your fund assigns you a risk strategy and investment profile, which remain unchanged throughout your working life.

  1. Lifecycle investment strategy

Your fund assigns you an investment strategy based on your age, and then changes it as you get older. Younger workers are given strategies that emphasise growth assets