Frequently Asked Questions about Superannuation

The amount of superannuation you need to have at retirement is based on how much money you would 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

Pension payments can be reduced due to the income test and asset test (see ‘What is the age pension’s income test?’ and ‘What is the age pension’s assets test?’).

Here are the maximum fortnightly payments:

Category	Single	Couple each	Couple combined	Couple apart due to ill health
Maximum basic rate	$808.30	$609.30	$1,218.60	$808.30
Maximum pension supplement	$65.90	$49.70	$99.40	$65.90
Energy supplement	$14.10	$10.60	$21.20	$14.10
TOTAL	$888.30	$669.60	$1,339.20	$888.30

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.

An SMSF is a self-managed superannuation fund. SMSFs have to follow the same rules and restrictions as ordinary superannuation funds.

SMSFs allow Australians to directly invest their superannuation, rather than let ordinary funds manage their money for them.

SMSFs are regulated by the Australian Taxation Office (ATO). They can have up to four members. All members must be trustees (or directors if there is a corporate trustee).

Unlike with ordinary funds, SMSF members are responsible for meeting compliance obligations.

SMSFs are allowed to carry on a business under two conditions.

First, this must be permitted under the trust deed.

Second, the sole purpose of the business must be to earn retirement benefits.

SMSFs must maintain comprehensive records and submit to annual audits.

There are five things you must do if you want to close your SMSF:

Fulfil any obligations listed in the trust deed
Pay out or roll over all the superannuation
Conduct a final audit
Lodge a final annual return
Close the fund’s bank account

As a casual employee, you’re 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

You can keep your superannuation fund for as long as you like, so nothing happens when you change jobs. Please note that some superannuation funds have special features for people who work with certain employers, so these features may no longer be available if you change jobs.

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