Superannuation is calculated at the rate of 9.5 per cent of your ‘ordinary-time earnings’. (For most people, ordinary-time earnings are their gross annual salary or 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.

As the Australian Taxation Office explains, some items are excluded from ordinary-time earnings. They include:

• Overtime work paid at overtime rates
• Expense allowances that are fully expended
• Expenses that are reimbursed
• Unfair dismissal payments
• Workers’ compensation payments
• Parental leave
• Jury duty
• Defence reserve service
• Unused annual leave when employment is terminated
• Unused long service leave when employment is terminated
• Unused sick leave when employment is terminated

Although the superannuation guarantee is currently at 9.5 per cent, 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.

You’re automatically entitled to superannuation if:

• 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

There are three different ways you can withdraw your superannuation:

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

Two rules apply if you choose to receive an account-based pension (also known as an income stream):

• You must receive payments at least once per year
• You must withdraw a minimum amount per year
  • Age 55-64 = 4%
  • Age 65-74 = 5%
  • Age 75-79 = 6%
  • Age 80-84 = 7%
  • Age 85-89 = 9%
  • Age 90-94 = 11%
  • Age 95+ = 14%

If you want to work out how long your account-based pension might last, click here to access ASIC’s account-based pension calculator.

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.

You can withdraw your superannuation (or at least some of it) when you reach ‘preservation age’. The preservation age is based on date of birth. Here are the six different categories:

When you reach preservation age, you can withdraw all your superannuation if you’re retired. If you’re still working, you can begin a ‘transition to retirement’, which allows you to withdraw 10 per cent of their superannuation each financial year.

You can also withdraw all your superannuation once you reach 65 years.

There are three different ways you can claim your superannuation:

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

Two rules apply if you choose to receive an account-based pension, or income stream:

• You must receive payments at least once per year
• You must withdraw a minimum amount per year
  • Age 55-64 = 4%
  • Age 65-74 = 5%
  • Age 75-79 = 6%
  • Age 80-84 = 7%
  • Age 85-89 = 9%
  • Age 90-94 = 11%
  • Age 95+ = 14%

If you want to work out how long your account-based pension might last, click here to access ASIC’s account-based pension calculator.

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.

Superannuation is compulsory. Generally speaking, it can’t be touched until you’re at least 55 years old.

The process used to consolidate several superannuation accounts into one is the same process used to change superannuation funds. This can be done through your MyGov account or by filling out a rollover form and sending it to your chosen fund.

Superannuation is not included when calculating your income tax. So if you have a salary of $50,000, your assessable income would be $50,000, not $50,000 plus superannuation.

That said, superannuation itself is taxed. It is generally taxed at 15 per cent, although if you earn less than $37,000, you will be reimbursed up to $500 of the tax you paid.

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.

Most funds will allow you to access your superannuation account online. Another option is to manage your superannuation through myGov, which is a government portal through which you can access a range of services, including Medicare, Centrelink, aged care and child support.

Australia’s modern superannuation system – in which employers make compulsory contributions to their employees – started in 1992. However, before that, there were various restricted superannuation schemes applying to certain employees in certain industries. The very first superannuation scheme was introduced in the 19th century.

Employers must pay superannuation at least four times per year. The due dates are 28 January, 28 April, 28 July and 28 October.

Before you set up a superannuation account, you’ll need to check if you’re allowed to choose your own fund. Most Australians can, but this option doesn’t apply to some workers who are covered by industrial agreements or who are members of defined benefits funds.

Assuming you are able to choose your own fund, the next step should be research, because there are more than 200 different superannuation funds in Australia.

Once you’ve decided on your preferred superannuation fund, head to that provider’s website, where you should be able to fill in an online application or download the appropriate forms. You’ll need your tax file number (assuming you don’t want to be charged a higher tax rate), your contact details and your employer’s details (if you’re employed).

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?

On the day you claim the age pension, you must be in Australia and you must have been an Australian resident for at least 10 years (with no break in your stay for at least five of those years). The following exceptions apply:

• You’re exempt from the 10-year rule if you’re a refugee or former refugee
• You’re exempt from the 10-year rule if you’re getting Partner Allowance, Widow Allowance or Widow B pension
• You can claim the age pension with only two years of residency if you’re a woman whose partner died while you were both Australian residents
• You might be able to claim the age pension if you’ve lived or worked in a country that has a social security agreement with Australia

These are the rules for most people who want to claim the standard pension:

Single people

• If your income per fortnight is up to $168, you’re entitled to a full pension
• If your income per fortnight is over $168, your pension will reduce by 50 cents for each dollar over $168

Couples

• If your income per fortnight is up to $300, you’re entitled to a full pension
• If your income per fortnight is over $300, your pension will reduce by 50 cents for each dollar over $300

These are the rules for most people who want to claim the transitional pension:

Single people

• If your income per fortnight is up to $168, you’re entitled to a full pension
• If your income per fortnight is over $168, your pension will reduce by 40 cents for each dollar over $168

Couples

• If your income per fortnight is up to $300, you’re entitled to a full pension
• If your income per fortnight is over $300, your pension will reduce by 40 cents for each dollar over $300

For most people, the age pension cuts off if your fortnightly income exceeds these thresholds:

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:

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