How super works

Super basics

If you want enough money for a comfortable retirement, spend some time learning about superannuation. Taking a few steps now to boost your super will make a huge difference to your lifestyle in the future.

1. What is super?

2. How to choose a super fund

3. Making super contributions

4. What happens to your super money?

5. Maximise super when you retire

What is super?

Superannuation is a way to save for your retirement. The money comes from contributions made into your super fund by your employer and, ideally, topped up by your own money. Sometimes the government will add to it through co-contributions and the low income super contribution.

Your employer must pay 9.5% of your salary into a super fund. This is called the Super Guarantee and it's the law. The Super Guarantee will gradually increase to 12% in coming years.

Over the course of your working life, these contributions from your employer add up, or 'accumulate'. Your super money is also invested by your super fund so it grows over time. When you retire, you will have money to live off - a nest egg. Super is a lifetime investment that has many benefits.

Super is changing

Superannuation law is changing over the next few years.

To find out more about the changes see ASIC: Stronger Super.

Save for your retirement

Start saving for your retirement early. The longer you have to save, the more chance your savings have to grow. Use retirement planner to find out if your super savings are on track.

Enjoy tax advantages

For most people, super will be taxed at a lower rate than a similar investment outside super.

Receive bonus contributions from the government

If you put your own after-tax money into super, you could receive a government co-contribution, depending on how much money you earn. See contributing extra to super.

If you earn up to $37,000 you may also get a 'low income super contribution' of up to $500 from the government. You will get this payment whether or not you add extra money to your super. See low income super contribution.

Get cheaper insurance

You may be able to get death, disability or income protection insurance through your super account at a cheaper price than if you bought it outside of super. See insurance through super.

How to choose a super fund

Most people can choose which super fund they'd like their super contributions paid into. If you want to choose your super fund, tell your employer by filling in a Standard choice form from the Australian Taxation Office (ATO) or from your employer.

In some cases your employer will decide which fund your super is paid into. If you don't (or can't) choose your super fund, your employer will put the money into a 'default' super fund, a fund nominated under an industrial award or by your employer.

Making super contributions

For most people, your employer must pay an amount equal to 9.5% of your salary into your super fund account.

It's important that you get paid what's rightfully yours. The 9.5% employer contributions are based on your 'ordinary time earnings'. For example, if your ordinary time earnings are $50,000 then you should be paid an additional $4,750 into super.

Ordinary time earnings are what employees earn for their ordinary hours of work including over-award payments, bonuses, commissions, allowances and certain paid leave. See the ATO's information on using ordinary time earnings to calculate the super guarantee.

You can make extra contributions by:

  • Putting some of your savings into your super account

  • Asking your employer to deduct extra money from your pay (before tax is taken out) and pay this into your super account - this is called contributing extra to super

  • Transferring super from another fund into your main super account on a regular basis

For self-employed people, your super contributions may be tax deductible.

Check Employer contributions calculator.

What happens to your super money?

Money in your super fund account is invested by your super fund. Most super funds offer a variety of investment options.

For example, if you choose a market-linked investment, the value of your super will move up and down with market movements. Or you might select a stable option with lower expected returns but fewer ups and downs.

You can choose how you'd like your money invested, if you want to. You can also transfer your money to a different investment option within the fund, or transfer to another super fund at any time.

Maximise super when you retire

If you retire and have reached your preservation age (i.e. 55 to 60), you can withdraw your super. There are three ways you can get your super:

1. As a lump sum

2. As a retirement income stream (e.g. a monthly payment)

3. A combination of both

If you choose to take your super as a retirement income stream, the money that you're not accessing continues to work for you and earn interest.

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