What is superannuation?

Superannuation is a tax advantaged way of saving for retirement and makes up two of the three “pillars” of the Government’s retirement income policy. The three pillars are:

• A Government funded means-tested age pension
• Compulsory superannuation contribution (i.e., the Superannuation Guarantee)
• Voluntary superannuation contributions

Superannuation is often simply referred to in everyday conversation as “super”. The Australian superannuation sector has grown to become one of the largest private pension funding arrangement in the world with assets exceeding $3.5 trillion as at the end of December 2021.

Superannuation consists of two distinct components:

• Are over 18 years of age, working on a full-time, part-time, or casual basis; or
• If under 18 years of age, you are employed for more than 30 hours per week.

Compulsory Superannuation

If you work in Australia, your employer may have to contribute to a superannuation fund for you under the Superannuation Guarantee system if you:

In certain limited situations, and industrial award or workplace agreement may impose additional superannuation obligations of an employer.

Superannuation payments are paid by your employer in addition to the salary or wages you receive. If you are eligible for superannuation, your employer will pay your superannuation directly into a superannuation fund.

Voluntary Superannuation

In addition to compulsory superannuation contributions, individuals may make their own personal and tax-deductible contributions and employers may make additional contributions for an employee, generally structured under a “salary sacrifice” arrangement. Salary sacrificed contributions are made from an employee’s pre-tax salary