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5.65%

$68

Legalsuper

$628

Advisory services
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Income protection
Online access
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Variety of options
MyChoice Platinum
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4.87%

$78

MLC

$913

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MyChoice Platinum
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6.14%

$78

MTAA Super

$443

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MySuper Platinum
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5.40%

$92

smartMonday

$622

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MyChoice Platinum
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6.78%

$73

WA Super

$513

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MyChoice Gold
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New

$575

BT Financial Group

$1.2k

Advisory services
Death insurance
Income protection
Online access
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MyChoice Gold
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5.39%

$180

IOOF

$1.1k

Advisory services
Death insurance
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Variety of options
MyChoice Gold
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-

$0

HUB24 Limited

$452

Advisory services
Death insurance
Income protection
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Variety of options
MyChoice Gold
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3.66%

$91

AMP Bank

$701

Advisory services
Death insurance
Income protection
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Term deposits
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MyChoice Gold
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4.57%

$0

Energy Industries Superannuation Scheme

$475

Advisory services
Death insurance
Income protection
Online access
Term deposits
Variety of options
MySuper Gold
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New

$0

Electricity Industry Superannuation Scheme

$365

Advisory services
Death insurance
Income protection
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Term deposits
Variety of options
MyChoice Gold
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New

$117

First Super

$597

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MyChoice Gold
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-

$0

Goldman Sachs JBWere Superannuation Fund

$335

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MySuper Gold
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Learn more about superannuation

Although the research shows Australians often put off thinking about super until later in life, it’s worth taking an interest in your retirement savings now – while you have the chance to do something about it.

To get you started, here are the basics when it comes to super rates in Australia: what you’re entitled to, how much you might need at retirement, and different ways to give your super a financial boost.

What is the current superannuation rate?

In Australia, employers must make contributions into your chosen super account as part of the superannuation guarantee scheme.

The rate of this contribution is currently 9.5 per cent of ordinary time earnings – a portion that is set to increase to 12 per cent in 2025. This is more than what the rate has been in the past: before the super guarantee was introduced in 1992, employers only paid 3 per cent of earnings into your super fund.

To further increase your savings, superannuation is also designed to be a tax-effective structure. Your employer’s super contribution is taxed at a concessional rate that is much lower than the tax you pay on your income. Extra money you put into your super fund can also attract tax benefits, depending on type of contributions they are.

To stay on top of your super, here are some ways to keep track of your savings:

  • Check how much superannuation you currently have set aside by visiting the Australian Taxation Office (ATO) section of your online myGov account. If you don’t have a myGov account, you can set one up.
  • Check how much money you should be receiving in super contributions from your employer through ASIC’s employer contributions calculator. If you think your employer isn’t paying you enough super contributions, the ATO can assist you.
  • Estimate how much super you’ll have when you retire through the ATO’s superannuation calculator.

How much super do you need to retire in Australia?

How much money you’ll need for retirement depends on many things; there is no one magic number as everyone’s financial situation is different.

Some factors that impact how much super you may need in your golden years include:

  • When you plan to retire – the longer you plan to work, the less super you may need. There is no official retirement age in Australia, but you can only withdraw your super when you reach your preservation age (currently between 55 and 60, depending on when you were born) and are retired.
  • How much of the age pension you will receive – many retirees use their super to supplement their age pension income. You can find out more about age pension eligibility and payment rates on the Department of Human Services website.
  • The standard of living you want to maintain – how much super you’ll need will depend on how much money you plan to spend in retirement on discretionary expenses like holidays, eating out and entertainment.
  • Your living situation – whether you are renting, paying off a mortgage, own your home outright or are living rent-free with family will affect how much super you need.
  • If you have any outstanding debts at retirement.

To give you an idea of how much you may need to retire, the Association of Superannuation Funds of Australia estimated how much retirees typically need if they want to live a ‘modest’ or ‘comfortable’ lifestyle.

According to ASFA’s figures from the June quarter of 2017, a couple living a modest lifestyle will need $34,911 a year to live on, while a couple with a comfortable living standard will need $60,063 per year. For singles, the amount is $24,270 and $43,695 respectively.

How can I increase my superannuation?

Making voluntary contributions towards your superannuation – on top of your employer’s compulsory contributions – can help give your retirement nest egg a boost while you are still earning money.

Here are four ways to increase your superannuation before you retire.

1. Make concessional contributions: put money in your fund by salary sacrificing

One way to boost your savings is to ‘salary sacrifice’ by arranging for your employer to direct some of your before-tax salary into your superannuation fund.

The advantage of salary sacrificing is any money you put into your super fund attracts a lower tax rate compared to the marginal tax rate. There is a cap, though, on the amount of money you can contribute before tax. If you exceed this limit, you will have to pay a penalty tax on your contribution.

2. Make non-concessional contributions: put money in your super from your after-tax income

You can also increase your super by putting money into your super fund from your after-tax income. Like before-tax contributions, this amount is also capped per financial year. If you are under the age of 65, though, you can ‘bring forward’ the next two years’ worth of after-tax contributions and increase the amount you contribute in a financial year.

3. Check if you are eligible for a government co-contribution

To help people with lower incomes save for their retirement, the government established a co-contribution scheme called the Low Income Superannuation Tax Offset (LISTO).

LISTO refunds some of the tax paid on concessional super contributions. To be eligible for the benefit, you must:

  • have an adjusted taxable income of no more than $37,000 for the financial year
  • derive at least 10 per cent of your total income from employment or your business
  • make concessional (that is, before-tax) contributions to your super

 4. Receive contributions from your spouse or partner

Your spouse or de facto partner can help top up your super by making contributions into your fund. As an added benefit, if you earn no income or a low amount of income, your partner can claim a tax offset for the contributions they make.

Another way to boost your super is to arrange for ‘contribution splitting’ with your partner, where some of their super contributions is placed into your super account. Contribution splitting is allowed so long as you are under the preservation age, or between your preservation age and 65 years and not retired.

To help you make an informed choice about super contributions, ASIC’s calculator estimates what type of contribution will give you the biggest boost towards retirement.

What is a SMSF?

A self-managed superannuation fund (SMSF) is your own personal super fund, regulated by the ATO, which offers you hands-on control over how your money is invested.

Members of an SMSF are trustees, responsible for developing the fund’s investment strategy, keeping detailed records and organising an independent audit for the fund. Trustees are liable if the fund doesn’t meet the government’s statutory and regulatory super requirements.

Can I accumulate more money in an SMSF?

There is no one answer as to whether you can accrue more money in an SMSF compared to a retail or industry super fund.

The general wisdom is the more super you have, the more cost-effective an SMSF is to run. ASIC recommends ensuring you have enough start-up money to make an SMSF a viable option, as SMSFs can come with more fees for accounting, legal work, audits and tax advice.

If you would like more advice, you can hire the services of a financial planner or accountant to help you. The ATO also has educational videos on their website about setting up an SMSF in Australia.

Frequently asked questions

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.

What is superannuation?

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

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.

How does superannuation work?

Superannuation is paid by employers to employees, at least once every three months. The ‘superannuation guarantee’ 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 guarantee 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 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.

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

 

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.

Can I take money out of my superannuation fund?

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

How do I set up an SMSF?

Setting up an SMSF takes more work than registering with an ordinary superannuation fund. 

An SMSF is a type of trust, so if you want to create an SMSF, you first have to create a trust.

To create a trust, you will need trustees, who must sign a trustee declaration. You will also need identifiable beneficiaries and assets for the fund – although these can be as little as a few dollars.

You will also need to create a trust deed, which is a document that lays out the rules of your SMSF. The trust deed must be prepared by a qualified professional and signed by all trustees.

To qualify as an Australian superannuation fund, the SMSF must meet these three criteria:

  • The fund must be established in Australia – or at least one of its assets must be located in Australia
  • The central management and control of the fund must ordinarily be in Australia
  • The fund must have active members who are Australian residents and who hold at least 50 per cent of the fund’s assets – or it must have no active members

Once your SMSF is established and all trustees have signed a trustee declaration, you have 60 days to apply for an Australian Business Number (ABN).

When completing the ABN application, you should ask for a tax file number for your fund. You should also ask for the fund to be regulated by the Australian Taxation Office – otherwise it won’t receive tax concessions.

Your next step is to open a bank account in your fund’s name. This account must be kept separated from the accounts held by the trustees and any related employers.

Your SMSF will also need an electronic service address, so it can receive contributions.

Finally, you will need to create an investment strategy, which explains how your fund will invest its money, and an exit strategy, which explains how and why it would ever close.

Please note that you can pay an adviser to set up your SMSF. You might also want to take the Self-Managed Superannuation Fund Trustee Education Program, which is a free program that has been created by CPA Australia and Chartered Accountants Australia & New Zealand.

What are reportable superannuation contributions?

For employees, there are two types of reportable superannuation contributions:

  • Reportable employer super contributions your employer makes for you
  • Personal deductible contributions you make for yourself

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.

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 extra superannuation can I add to my fund?

There is an annual limit of $25,000 for concessional contributions – that is, money paid by your employer and extra money you pay into your account through salary sacrificing. There is also a limit on non-concessional contributions. Australians aged between 65 and 74 have a limit of $100,000 per year. Australians aged under 65 have a limit of $300,000 every three years.

How long after divorce can you claim superannuation?

You or your partner could be forced to surrender part of your superannuation if you divorce, just like with other assets.

You can file a claim for division of property – including superannuation – as soon as you divorce. However, the claim has to be filed within one year of the divorce.

Your superannuation could be affected even if you’re in a de facto relationship – that is, living together as a couple without being officially married.

In that case, the claim has to be filed within two years of the date of separation.

Either way, the first thing to consider is whether you’re a member of a standard, APRA-regulated superannuation fund or if you’re a member of a self-managed superannuation fund (SMSF), because different rules apply.

Standard superannuation funds

If your relationship breaks down, your superannuation savings might be divided by court order or by agreement.

The rules of the superannuation fund will dictate whether this transfer happens immediately, or in the future when the person who has to make the transfer is allowed to access the rest of their superannuation (i.e. at or near retirement).

Click here for more information.

SMSFs

If your relationship breaks down, you must continue to observe the trust deed of your SMSF.

So if you and your partner are both members of the same SMSF, neither party is allowed to use the fund to inflict ‘punishment’ – such as by excluding the other party from the decision-making process or refusing their request to roll their money into another superannuation fund.

This no-punishment rule applies even if the two parties are involved in legal proceedings.

Click here for more information.

Financial consequences

Superannuation funds often charge a fee for splitting accounts after a relationship breakdown.

Splitting superannuation can also impact the size of your total super balance and how your super is taxed.

Click here for more information.

How can I increase my superannuation?

You can increase your superannuation through a ‘salary sacrifice’. This is where your employer takes part of your pre-tax salary and pays it directly into your superannuation account. Like regular superannuation contributions, salary sacrifices are taxed at 15 per cent when they are paid into the fund.

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 do you set up superannuation?

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).

What are concessional contributions?

Concessional contributions are pre-tax payments into your superannuation account. The payments made by your employer are concessional payments. You can also make concessional contributions with a salary sacrifice.

What are reportable employer superannuation contributions?

Reportable employer superannuation contributions are special contributions that an employer makes on top of the regular compulsory contributions. One example would be contributions made as part of a salary sacrifice arrangement.

What is salary sacrificing?

A salary sacrifice is where your employer takes part of your pre-tax salary and pays it directly into your superannuation account. Salary sacrifices come out of your pre-tax income, whereas personal contributions come out of your after-tax income.

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.

How do you create a superannuation account?

Before you create 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).