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Learn more about superannuation

Total and permanent disability (TPD) cover is a type of insurance that can provide a financial safety net if you are seriously injured or ill and unlikely to be able to work again. With TPD insurance, you’re paid a lump sum to help cover the cost of living, medical treatment, rehabilitation and debt repayments.

Certain superannuation funds offer total and permanent disability cover as part of broader life insurance coverage. With TPD cover through your super, you pay a premium just as you would any other insurance policy, but the cost is taken out of your super balance.

How to find out if you have total and permanent disability cover through your super

Many super funds offer life insurance coverage, but not all include total and disability permanent cover. If your super is with your employer’s default fund, the fund is required to offer a minimum level of life insurance, but that usually doesn’t include TPD cover.

To check insurance coverage through your super, take a look at your member statement or login to your super account online. Make sure to check the type of insurance cover you have (because it may not include total and disability cover), what you’re covered for, and the cost of your premium.

What other types of insurance are offered by super funds?

Along with TPD insurance, many superannuation funds offer the following types of insurance:

  • Death cover – This is generally called ‘life insurance’ and gives your beneficiaries a benefit if you die, either as a lump sum or ongoing payments.
  • Income protection (IP) cover – If you’re out of work temporarily due to illness or disability, you can be paid an income for a specified period.

Super funds that offer a basic level of life insurance (death cover) will usually allow you to tailor your coverage to suit your needs. So even if you don’t have TPD cover as part of your current insurance, you may be able to add it on.

Should you get total and permanent disability cover?

While income protection insurance can replace some of your income if you are temporarily unable to work due to illness or injury, it could also useful to have a lump sum of money to cover your immediate costs. That’s where TPD cover comes in.

Deciding whether to get total and permanent disability cover depends on a number of factors, including:

  • Occupation – Whether your work makes you susceptible to permanent injury or illness.
  • Current insurance – Whether other insurance offered by your super or a private health fund is sufficient.
  • Family income – What you earn as a family and whether it would be enough to live off if you had to stop working permanently.
  • Support network – How much support and assistance would be available to you if you had to stop working.
  • Flexibility – Whether you could afford to cut down on expenses or reduce debt.
  • Other benefits available to you – Whether you could access benefits through workers’ compensation or the government.

How to make a TPD claim

You can make a TPD claim if you satisfy the criteria for total and permanent disability outlined by your super fund or insurance provider.

To make a claim, you’ll need to get in touch with your provider so they can give you the necessary claim forms. You’ll also need to provide supporting documentation (such as medical reports) to prove that you’re no longer able to work.

How to find superannuation funds with total and permanent disability cover

Your occupation, age and other factors will likely dictate whether or not you decide to take out total and permanent disability cover. If you decide to purchase TPD insurance, doing so through your super fund could be the most cost-effective option. This is because super funds are able to purchase policies in bulk and pass on savings to members.

When comparing superannuation funds with total and permanent disability cover, be sure to consider:

  • The level of coverage – Calculate whether the lump sum payout would be adequate to live off if you had to stop working.
  • The definition of TPD – Different providers have different criteria for total and permanent disability. Read the product disclosure statement to see the definition.
  • Own or any occupation – Some policies allow you to claim if you can no longer work in your usual occupation, whereas others will only allow you to claim if you can no longer work in any capacity.
  • Whether you can link policies – Bundling a life insurance policy with TPD is often most cost-effective.
  • A buy-back option – You may be able to purchase a buy-back option, which allows you to reinstate the amount deducted from your benefit when you make a claim.
  • Waiting period – You may have to wait for a specified period after applying before you can make a claim.

Head to RateCity’s superannuation comparison tool to compare insurance policies offered by different super funds.

Frequently asked questions

What happens to my insurance cover if I change superannuation funds?

Some superannuation funds will allow you to transfer your insurance cover, without interruption, if you switch. However, others won’t. So it’s important you check before changing funds.

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

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.

What will the superannuation fund do with my money?

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

Is superannuation compulsory?

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

How much is superannuation in Australia?

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.

How does the age pension work?

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.

What happens if my employer falls behind on my superannuation payments?

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.

How do you access superannuation?

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

How many superannuation funds are there?

There are more than 200 different superannuation funds.

How do you claim superannuation?

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.

Is superannuation paid on unused annual leave?

If your employment is terminated, superannuation will not be paid on unused annual leave.

Am I entitled to superannuation if I'm a part-time employee?

As a part-time 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

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.

When did superannuation start in Australia?

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.

Can I choose a superannuation fund or does my employer choose one for me?

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.

What is the difference between accumulation and defined benefit funds?

A majority of Australians are in accumulation funds. These funds grow according to the amount of money invested and the return on that money.

A minority of Australians are in defined benefit funds – many of which are now closed to new members. These funds give payouts according to specific rules, such as how long the worker has been with their employer and their final salary before they retired.

How is superannuation calculated?

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.

How do I change my superannuation fund?

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.

Am I entitled to superannuation if I'm a casual employee?

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