Superannuation – How Does It Work In Australia?

Superannuation is a very popular method of saving for retirement used by millions of Australians. In this method, employers deposit 10% of the monthly salaries of their employees into a fund which is then invested into different schemes to ensure balanced growth. Employees can also contribute to their superannuation fund. In some cases where employees are eligible, even the government contributes to the superannuation fund.

In the simplest of terms, superannuation, popularly known just as super in Australia is the money that is put aside by the employer during the working life of the employee to support the lifestyle of the employee after his retirement. As such, super is considered very important by employees. They know that they will get more money after retirement if they save more during their working life.

Eligibility Criteria for Superannuation:

  • You are eligible for super if you are over the age of 18 and your weekly salary is more than $450
  • You are eligible if you are under the age of 18 and earn more than $450 a month and work for more than 30 hours every week
  • You are eligible for super whether you work casual, part-time, or as a full-time employee

Superannuation is A Legal Requirement!

The employer contributes to the super fund of the employee because it is a legal requirement in Australia. The super fund is then invested so that the money grows until the employee retires. It is clear that an employer needs to start contributing to the super of an employee as soon as he/she starts earning more than $450 per week. The money the employer contributes to the fund is called Superannuation Guarantee and it is 10% of the income of the employee before taxes.

How Super Works?

There are many different types of super funds and also different types of accounts. An employee has the option of combining the accounts if he/she is having more than one super account. They have the liberty to choose an account with a lower fee. It is their money and so they have the liberty to compare the benefits of their fund with other funds available in the market.

The super account of an employee is insured which means that they can withdraw the money in the fund in case of an illness or injury that forces them out of work. As the employee nears retirement, they have the liberty to switch their super account into an account called Choice income account which allows them to earn a regular monthly income after retirement.

You don’t need to worry about the fee that is charged for managing your superannuation account. It comes out of the balance in your super. However, even a small difference in the superannuation fee can mean a big difference in the final amount you receive at the time of your retirement.


In the end, it is important for you to keep an eye on your super as it is your money that is at stake. Keep checking the contributions of your employers and the balance in your super. You also need to make sure that your super is invested in the right scheme so that you can receive a handsome amount at the time of your retirement.

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