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Super basics

Superannuation is a valuable financial asset. For many people, it will be their main source of income during retirement. Understanding how super works is therefore very important.

Types of super

There are two types of super:

  • Defined benefit super. This means your super benefit is calculated using a formula that is generally linked to employer contribution rates, salary amounts and the number of years of employment or fund membership. The benefit may therefore be different depending on when and how you leave your employer. A defined benefit is generally not affected by a fund’s investment performance.
  • Accumulation super. This style of super usually works like a bank account. Regular contributions are paid into an account in your name and the account balance is adjusted for investment returns (which may be positive or negative). Your super benefit at retirement or withdrawal is the balance of your account (less any applicable fees and taxes).

Does my employer have to pay super for me?

By law, an employer must generally pay super on behalf of eligible employees - these are known as Superannuation Guarantee (SG) contributions. In a Defined Benefit fund an employer meets their SG obligation to you by providing a benefit that is certified by an actuary as having sufficient value to meet its obligations.

Regardless of whether you’re a full-time, part-time or casual employee, or if you’re a temporary resident of Australia, your employer must make SG contributions (or provide a Defined Benefit with its value certified as being sufficient) for you if you are over age 18 and are paid $450 or more (before tax) in a month.
If you’re under 18, you must meet these conditions and work more than 30 hours per week to be entitled to SG contributions.

An employer does not have to make SG contributions for you if you are:

  • earning less than $450 (before tax) per month
  • under age 18 and work 30 hours or less per week
  • a non-resident employee on certain types of visas.

If you are covered by an Award, your employer may be required to pay super for you even if the SG contribution requirements don’t apply to you.

How much super does my employer have to pay?

If you’re eligible for SG contributions, for 2015-16 your employer must generally contribute a minimum of 9.5% of your ordinary time earnings up to the maximum contribution base. This minimum will gradually rise to 12% from 1 July 2021. SG contributions are in addition to your salary or wages. For more information on how much your employer has to pay, visit the ATO website.

When can I get access to my super?

Generally, your super is preserved, which means it must stay in the super system until you permanently retire after reaching your preservation age, or until you meet another condition of release as allowed by law. Your preservation age will be between 55 and 60 depending on your date of birth. In some cases, you may have some non-preserved super benefits, which you may be able to receive in cash before you retire, although some conditions apply. See accessing your super for more information.