Compare super funds with credit cards

There are more than 200 different superannuation funds.

Employers are required to pay superannuation to all their staff if the staff are:

• Over 18 and earn more than $450 before tax in a calendar month
• Under 18, work more than 30 hours per week and earn more than $450 before tax in a calendar month

This applies even if the staff are casual employees, part-time employees, contractors (provided the contract is mainly for their labour) or temporary residents.

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.

Superannuation accounts can be opened by Australians, permanent residents and temporary residents. 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

Changing superannuation funds is a common and straightforward process. You can do it through your MyGov account or by filling out a rollover form and sending it to your new fund. You’ll also have to provide proof of identity.

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:

Four questions to ask yourself before taking out an SMSF include:

1. Do I have enough superannuation to justify the higher set-up and running costs?
2. Am I able to handle complicated compliance obligations?
3. Am I willing to spend lots of time researching investment options?
4. Do I have the skill to make big financial decisions?

It’s also worth remembering that ordinary superannuation funds usually offer discounted life insurance and disability insurance. These discounts would no longer be available if you decided to manage your own super.

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

No, self-employed workers don’t have to pay themselves superannuation. However, if you do pay yourself superannuation, you will probably be able to claim a tax deduction.

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.

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.

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

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.

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.

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

As the Australian Taxation Office explains, there are times when superannuation is paid on overtime and times when it isn’t.

Here is the ATO’s summary:

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.

Your money will be invested in an investment option of your choosing.

The Australian Taxation Office will investigate if your employer falls behind on your superannuation payments or doesn’t pay at all. You can report your employer with this online tool.