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What is superannuation in Australia?

Updated on 4 July 2024

4 minute read

Superannuation (super) is a way you save money for when you get older and retire from work. By learning how super works, you can start planning for a better future.

Super Insider host Anne Fuchs: Hello and welcome to Super Insider where we chat about what you need to know to make the most out of your super. I'm Anne Fuchs and I'm the Executive General Manager of Advice, Guidance and Education at Australian Retirement Trust. 

Now, before we begin this podcast, I'd like to acknowledge the Traditional Owners of land and waters where we're recording this podcast today. Now, of course, before we begin, also, it's important to remind you that what you're listening to today is general advice only, and you'll need to decide if it's right for you.

So, we're doing things a little bit differently on this episode of Super Insider. We've got April Smith and Kane Everingham from our education team answering some of the most frequently asked questions from our members and people in the community about what they want to know about super. So, for now, I'm handing it over to Kane and April.

Kane: Okay, well, thanks for that, Anne. So, as you heard, you're with Kane and April, we're from the Member Education team at Australian Retirement Trust. Now, what you may not know, we're on the road. Last year alone, we delivered almost 2,000 education events, seminars, webinars to almost 100,000 people. So, we get to speak to a lot of people around superannuation. So, what we've done today, a lot of the questions we get, we've pulled those together, we're going to go through those today and April it's pretty fair to say if we had a dollar for every time we got asked these questions, we'd be very rich right now.

April: Yes, we'd have a few dollars, Kane.

Kane: Beautiful, I'd be on the Riviera somewhere. So, look, the first one I'm going to launch into is how does super actually work. So superannuation was actually introduced by the Australian Government as a way of really forcing us to save for our retirement. Think about it like a delayed bank account. So, during your working life you'll have a superannuation account, you might end up with more than one, but your employer will start putting money into your superannuation account. You can also choose to put your own money, or your own contributions into super. That money is invested and over time, through a combination of your contributions and your investment returns, that retirement nest egg, your superannuation account, is growing and that's what the government wants us then to use to help fund our retirement. Now, I did just reference it briefly there April, but a lot of people end up with multiple super accounts. How does that happen? How do I deal with that?

April: Yes, well Kane, I was actually one of those people that had multiple superannuation accounts. So how did I actually get multiple superannuation accounts? One of those reasons is I had multiple employers, so multiple jobs. So, when you start with an employer, they'll have their own default superannuation fund, and over time you'll accumulate all these different superannuation accounts. How many superannuation accounts do you think I had, Kane?

Kane: Because you're asking me, I reckon it's going to be high, I'll go 3.

April: Yeah, well, I actually had 5 separate superannuation accounts, yes. And you're going to tell me later all the considerations of potentially consolidating, but it might surprise you to learn I actually had one person talk to me, or I helped them consolidate 19 superannuation accounts.

Kane: Wowsers.

April: Now, if you actually think of, historically, how you tried to consolidate that superannuation, it was quite hard. But it might surprise our audience to know that it is so simple now. So, all you need to do is you go through to your myGov account, you link the ATO, you click all your superannuation accounts, and you consolidate it into one. It is that easy, and that gentleman was very happy to know that it was so easy to just consolidate his 19 accounts.

Another way you can do it is maybe call your contact, call the superannuation fund, and get yourself registered for Member Online. You might be able to consolidate that way as well. But maybe when we're talking about consolidating, Kane can you share the benefits and considerations of why you would look to consolidate your super?

Kane: As you've heard there April you had 5 accounts, like what would be the benefit in combining them? Often times, when you've got multiple superannuation accounts, you're paying multiple sets of fees. So if I've got, like April, if I had 5 super accounts, I'd be paying 5 lots of fees. Often people don't also understand you may have multiple lots of insurance inside your super, so you might have 2 or 3 lots of insurance, you're paying for 2 or 3 lots of insurance. That, combined with your fees, is actually then reducing your retirement money. So very important to have a look at that.

And also, a more simpler reason why you might consolidate  - just less paperwork. You've got all these statements flying around, you've got communication from your super fund. If you consolidate that down to one, then it's easier when you move jobs or you shift houses, you're only updating with one company. Now, very important, if you are looking to combine your superannuation funds or you hear the term consolidate, just make sure you look into it, because if I did have 2 or 3 lots of insurance and I wanted to consolidate into one account, I'm going to lose those other couple of bits of insurance. So ask yourself, is that okay? Have you got the insurance you need in your preferred super account? Always important to look at that. Also, just check is there anything like exit fees, other fees, or charges that they could charge you when you do consolidate. So, very important to have a look at that.

April, I'll throw to you now. So, if I did want to combine my super funds, how do I actually even compare them and what do I need to compare?

April: That's really important when you are choosing a superannuation fund. Let's firstly go to how can you actually compare superannuation funds? There are super ratings websites where you can actually see how super funds stack up compared to each other. MyGov as well have a super comparison tool. So have a look at those and then you'll be able to see how your super fund stacks up to the rest of the superannuation providers. But what do you need to consider when you are looking for a superannuation fund? Things to look at is, we've made up this magical word called F.I.P.S. So what it stands for is fees, insurance, performance and service. So, fees. When we look at fees, you might actually be confused when you look at fees because they might differ. Well, firstly, you pay an admin fee, then you might pay an investment fee, and that might vary. So understanding how that fee is actually applied.

But it is so important to understand those fees. So just because the fee is higher doesn't necessarily mean the returns are going to be less. So have a look on the super fund's website, read one of their booklets, what is the objective of that investment option? So I have a look at risk profile, fees, and what is the objective after fees have been applied.

And speaking of that F.I.P.S., our second one is insurance. So insurance, now a lot of people don't actually know that insurances form a part of superannuation. And you might have death cover, total and permanent disability cover, income protection, and that might automatically be applied to your superannuation account.

I do remember speaking to a lady who was claiming, when I was working in the Contact Centre. She was claiming financial hardship for 7 years, not realising, 7 years ago when she was deemed medically unfit to work, that she had $500,000 of insurance she could claim. So as you can imagine, that's going to make a huge difference to her, so hence why I sent her out a claim form and talked to her about claiming on her superannuation. So, really important to engage with your super so you know what's included and part of those might be your insurances.

Another one, what's the "P" it's performance. So this is where we're looking at that investment option, so how is that investment option performing? And I will get you to go through in a bit more detail on performance, on investments.

But our last one there is service. So, what service do you get from the superannuation fund? Do you have amazing podcasts like this one with Kane and April? Do you have seminars, webinars? Do you have an office that you can visit? Is your contact centre in Australia? How easy is it to talk to the people that work there? So that's really important as well. So, what is the service you receive? And also, do you have financial advice that's part of your membership? Another thing though is, as I mentioned before, is that "P" word performance. And I'm going to get you to touch on the investments.

Kane: So, another common question, as you heard April reference, a lot of people are wondering what investment option should I be in? How do I choose the right option for me? So first of all, if you've never made a decision and this is news to you that you actually can choose investment options, don't be alarmed. Super funds have what they call a default option, so if you don't make a decision, they'll just pop you in their default option. And just because it's default doesn't mean it's good, bad, or otherwise, it's generally a fine option. It just may not be the right one for you.

How do you choose the right one for you? Depends on what you're trying to achieve. Now, as an ex- financial adviser I'd normally do what's called a risk profile to take you through a range of questions to find out how you feel about investing and what you're trying to achieve, and then make a recommendation based on that. So it really depends on what you want to achieve, and I really want to highlight I call it the "sleep at night" factor. There's great information on most super funds' websites about their investment options.

And one particular part I love on there, jump on there, have a read of them, what are they trying to achieve? What returns? What are the fees? But a little section I really like is they actually show you how often in a 20-year period, is that option expected to have a negative return?

Now this is the gut check part. If I choose an option and it says over 20 years it's expected 1 to 3 times to have a negative return, versus there might be another option that says 6 or 7 times over that same 20-year period, it's going to have a negative return. What did that do to your gut just then? 1 to 3 times negative or 6 to 7 times. If that made you pucker up a little bit, well okay, maybe I need to choose something a little bit more defensive for how I invest.

So just be aware with that, you know, if you're chasing more aggressive options, like things like international shares, Australian shares, they can get you higher returns over the long term, but they can also give you the big losses as well. So it might be up 20% one year, down 12, up 7, down 8. So they can be a much bumpier ride, so you've got to be comfortable with how your money's invested, that's probably the key thing and that's certainly something, it's the age-old adage, don't put all your eggs in one basket. Diversification, you can choose multiple options, a lot of the options even diversify within them so they choose different assets to invest in.

And that's the role a financial adviser can certainly help you with as well if it all just makes your head hurt, most super funds will give you access to financial advice or be able to put you in contact with someone in that regard. I'm going to throw to, I think this would be probably the most, you know, it'd be on the dice as it'd be 1, 2 or 3 top-asked questions, when can I actually access super, April?

April: Yeah, and it's actually one of  those common questions that people actually get wrong. So I'm going to go through when you can actually access your super, and a misconception that people actually can access their super at Age Pension age.

Now, Age Pension age is actually about 66 to 67 depending on when you're born. And the amount of people that I've actually spoken to who think that they can access their superannuation at 67 is phenomenal.

So when can you access your super? Well it's once you've hit your preservation age, and you permanently retire. So what am I talking about when I talk about preservation age? So, if you're born after the 30th of June 1964, your preservation age is the age of 60. So preservation age, retired, ceased work after the age of 60, or a magical number with accessing super is 65. So regardless of your working arrangements, you can access your super in its entirety at the age of 65.

But what happens if you still working, after your preservation age but before the age of 65? Can I access my super? Well, yes, you may be eligible to access a part amount of your superannuation by using a Transition to Retirement account. Now we do have a Super Insider podcast on Transition to Retirement, episode 9, so check it out if you want more details.

Another common question that we also get is what happens to my super in the event I pass away? So take that away, Kane.

Kane: Alright, thanks for that one. Give me the morbid, morbid question. Look, firstly, I'll start with that because it is a very common concern, what happens to my super when I die? Firstly, I just want to highlight that superannuation isn't automatically an estate asset.

Now what I mean by that is, a lot of people will come up to us and if we ask, we're talking to them about their super, they'll go, oh it's fine, I've got a Will. But super doesn't automatically go to your Will. It can if you want it to, but it doesn't automatically go there. So most super funds will offer a combination of things.

So there could be what's called a binding death benefit nomination. Now what that, as the name implies, you are telling the fund "this is where I want my super to go", and there are certain people you're allowed to nominate, but it tells you that, you fill the form out, that will, the fund is then bound by that.

Some funds also offer what's called a non-binding death benefit nomination. Now, as the name also implies, the fund isn't bound by that. It's more a “hey, this is where I would like my super to go, this is a recommendation to my super fund". Just to touch on that binding death benefit nomination, you can nominate what's called your legal personal representative. Now that is effectively telling the super fund, hey, I want my super to go to my estate, I've factored it into my Will. So that's often very important, if you want some money, say, to go to charities or nephews, nieces, just some different people, or organisations that you couldn't normally nominate through a binding death benefit nomination.

Now, when you're later in life, you've turned your super into an income stream, you've starting to get some income, you can often do what's called a reversionary pension nomination.

Now, I'll use my wife and I as an example. If I had a pension, I could make my wife the reversionary, and what that means is if I pass away, my wife would then have the choice to either keep taking my super as a pension, or she could take it as a lump sum. So it just ensures that you've made decisions in advance for, heaven forbid, when that happens, so your family are looked after.

I know that we're coming to a close here, April, but I think it's important that we kind of finish off with, you know, a lot of people will how ask how often should I talk to my super fund? How often should I actually look at things on my super fund? So I'd love to hear your thoughts on that one.

April: Now, annually you'll get your Member Benefit Statement, so when you receive that Member Benefit Statement, don't just open the envelope, and put it in the bin. There’re probably some important legislation updates, you also want to see what contributions have come into the superannuation. So at least annually.

However, maybe your salary's increased, maybe you've got a new baby on the way, maybe you've got a mortgage, maybe you're actually at Age Pension age and you're looking to access Age Pension and your superannuation. Legislation changes, just check in with us as often as you possibly can.

Don't be that person that gives us a call 10 minutes before they actually go to retire. Make sure that you are checking in with all of those changes. But as you said, we are wrapping up so what are we going to leave our audience with?

Kane: Okay, so you've covered some really good stuff there, April. So, I definitely cannot stress this enough, no question is too silly. If you've thought it, I guarantee someone's asked us at least 100 times before. So I've even encouraged people that I've come across, write down your questions and then ring your super fund and actually go through those questions one by one, because that's what you super fund is here for. We're here to help, we want you to have the best retirement you can.

So, thank you for your time today, folks. On behalf of April and myself thanks for listening in. And we’ll see you on the next episode.

Kane: Well, that’s about all we have time for today. We’ve got some more Q&A sessions coming up, so if you do have any questions, we’d love to answer them. Just shoot us an email to That’s

Thank you for listening to Super Insider and we hope you can join us again next time.

April: Thank you.

What is super?

Superannuation is money that's put aside in a super fund for your retirement. It's made up of:

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Payments from your employer

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Money you put in a super account yourself

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Any money your super investments earn

What is a super fund?

A simple way to think of a superannuation fund is like a giant piggy bank for retirement savings. They invest and look after your super until you're allowed to start using it.

Usually, you can access your super when you retire or reach a certain age. The government sets the rules for this.

The sooner you start saving, the more you'll have for retirement.

How does superannuation work?

Here are the basics of how super in Australia works.

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You choose who looks after your super

You can usually pick any super fund you want.

Your choice could make a big difference to how much you end up with. So it's a good idea to compare funds first. 

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Your employer pays you super

Your employer usually has to send a percentage of your pay to your super account.

You can also pay into a fund for yourself if you're a sole trader or in a partnership.

Log in to check your employer is paying you super.

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Your fund invests your money

Your super fund invests your money to help your balance grow over time.

As a member with us, you can choose your investment options, or leave it to us to decide for you.

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You retire with your savings

You can generally take out your super when you turn 60 and retire. Or from 65 even if you're still working.

You can also use our Retirement Income account or Lifetime Pension to turn it into a regular income.

In special situations, you can get your super earlier if you need it.

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Think about insurance, too

Many funds offer insurance cover. This gives you a safety net for injury, illness, or death. And it helps your family feel protected, too.

It's not always automatic, so you may need to opt in or apply for cover.

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Over 2.3 million members trust us to take care of their retirement savings. Enjoy being part of one of Australia’s largest super funds.

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How does my superannuation account work?

It's not like a regular bank account. Your super fund invests your money and takes care of it – often for decades – for your retirement, until you take it out.

The account you have depends on which phase of life you're in. But you can have more than one type of account.

  1. Accumulation: Your super's growing while you're working

  2. Retirement: You can start taking out your super as you're nearing, or in, retirement.

We offer a few different account types.

What is an accumulation account?

The most common account is an accumulation account. It's where your money accumulates, or grows, over time.

  • You or your employers pay money (contributions) into your account.
  • Your super fund invests your balance, and your super grows over time.
  • You can choose different investment options.
  • You generally pay up to 15% tax on earnings from your investments.
  • When you retire, you can take out your money or open an income account and get regular payments.

How much super should I be paid?

By law, your employer must pay 11.5% of your ordinary time earnings (OTE) into your super account.

We call this the superannuation guarantee (SG) contribution.

Your employer has to pay super at least 4 times a year. So, check your account transactions or myGov regularly.

To get the SG contribution, you must be: 

  • full-time, part-time, or casual

  • if under 18, working 30+ hours a week

  • if a private or domestic worker, working 30+ hours a week.

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Want to save more and maybe pay less tax?

You can add extra money on top of what your employer pays.

FAQs about super

MySuper is a default investment strategy (also called a product). Some people prefer to leave the investment decisions to their fund, so MySuper suits them best.

When you start a job, your employer must pay your super into a fund with a MySuper option if you don't:

  • choose a super fund
  • have an existing account that’s linked, or ‘stapled', to you.

MySuper features

  • MySuper products generally have fee limits and simple features.

  • They also have automatic insurance cover for members age 25 and over, and with more than $6,000 in their account.

  • You can have part of your super in other investment options, while keeping some of your balance in a MySuper option.

Each fund usually has a different name for this option. Ours is called the Lifecycle Investment Strategy.

Actually, you can usually choose your own fund.

If you don’t pick one and don’t already have a super account, then your employer will open one for you.

If you're a member with us, you can log in to your account using Member Online or our app.

If you haven’t logged in online before, you'll need to set up your online access first.

If your employer hasn't paid any money to your super account, start by asking them which fund they're paying it to.

You can send your account details to your employer with our online form (if you’re a member with us).

If they're still not paying you or the payments are late, you can report it to the Australian Taxation Office (ATO).

Your super fund looks after your savings until you reach your access age and/or retire.

Generally, this means:

  • If you're 65 years or older, you can get your super even if you're still working.
  • If you retire after turning 60, you can get your super.
  • If you leave a job after turning 60, you can start using the super you've saved up until then.
  • If you're between age 60 and 64 and still working, you may be able to get some of your super with a Transition to Retirement Income account.

Sometimes you might be able to get your super early, such as medical conditions or financial hardship.

If you're made redundant, your employer doesn't need to pay super on your redundancy payments.

That's because redundancy payments aren't part of your OTE (what you earn for your day-to-day hours of work) under the ATO's rules.

But let's say your employer pays you out instead of giving you the right amount of notice.

The ATO classes this type of termination payment as OTE. So that means you'll usually get paid super on it.

Using your redundancy payout to top up your super

You can put part, or all, of your redundancy pay into your super yourself as an after-tax contribution. Just check your contribution limits before you do.

Get your super growing

Trust in us to help you save for life after work. We're open to all Australians.

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