Frequently Asked Questions about Superannuation

Superannuation is designed to provide Australians with money in their retirement. The government has strict rules around when people can take that money out of their fund because it wants to prevent people eroding their savings before they reach retirement.

As a general rule, you can only take money out of your superannuation fund when you reach:

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

That said, you can take money out of your superannuation fund early based on one of these seven special conditions:

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

Superannuation is paid by employers to employees. 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.

Currently, the superannuation rate is currently 9.5 per cent of an employee’s ordinary time earnings. This 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.

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

No, your employer can’t touch the money that is paid into your superannuation account.

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.

A superannuation fund is an institution that is legally allowed to hold and invest your superannuation. There are more than 200 different superannuation funds in Australia. They come in five different types:

Retail funds
Industry funds
Public sector funds
Corporate funds
Self-managed super funds

Retail funds are usually run by banks or investment companies.

Industry funds were originally designed for workers from a particular industry, but are now open to anyone.

Public sector funds were originally designed for people working for federal or state government departments. Most are still reserved for government employees.

Corporate funds are arranged by employers for their employees.

Self-managed super funds are private superannuation funds that allow people to directly invest their money.

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.

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

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

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

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