Superannuation, or “super” as it’s commonly known, is a retirement savings system in Australia that involves money earned by an employee being placed into an investment fund to be made legally available to fund members upon retirement. But what exactly is superannuation, and how does it work?
In this article, we’ll dive into what is superannuation in Australia, exploring its history, how it functions, and why it’s essential for your financial future. So, buckle up and get ready to unravel the super mystery!
Superannuation began in 1992 under the Keating Labor government. Before then, superannuation existed in Australia but was not widespread and was paid at the discretion of employers, usually solely to white-collar workers in the private sector. From July 1, 1992, under the system now known as the Superannuation Guarantee (SG), employers were required to make superannuation contributions on behalf of their employees.
Under the Australian superannuation system, employers make compulsory payments to these funds at a proportion of their employee’s wages. As of 2023, the mandatory minimum contribution is 10.5%. This percentage figure is referred to as the “superannuation guarantee.” As of March 30 2022, Australians have AU$ 3.5 trillion invested as superannuation assets, making Australia the 4th largest holder of pension fund assets in the world.
There are two types of super funds: defined benefit funds and accumulation funds. Most super funds are accumulation funds, where your money grows or ‘accumulates’ over time, and the value of your super depends on the money that you and your employers put in (known as super contributions) and the investment return generated by the fund after fees and costs.
Employers must pay a minimum amount based on the current super guarantee rate of your ordinary time earnings into super. You can also add more money to your super by choosing the best option, like before or after-tax contributions. When you join a super fund, you’ll automatically be invested in the default investment option unless you choose another investment option.
To illustrate the impact of superannuation on Australians’ financial futures, let’s look at some statistics and data:
Superannuation is a retirement account that Australians can use to fund their retirement, while retirement means building enough wealth not to need to work again.
Yes, when you start a job, you can usually either choose a super fund or let your employer choose for you. Most funds offer a simple, low-fee option called a MySuper product, which is the default product your employer will use for you.
If you are a temporary resident working in Australia and you are eligible for super, your employer has to make super guarantee contributions for you5. When you leave Australia, you can apply to have your super paid to you as a Departing Australia Superannuation Payment (DASP).
Superannuation is a crucial aspect of financial planning for Australians, providing a secure and stable foundation for retirement. By understanding the ins and outs of superannuation, you can make informed decisions about your financial future and ensure a comfortable retirement. So, now that you’ve unravelled the super mystery, it’s time to take control of your superannuation and secure your financial future!
Up until working with Casey, we had only had poor to mediocre experiences outsourcing work to agencies. Casey & the team at CJ&CO are the exception to the rule.
Communication was beyond great, his understanding of our vision was phenomenal, and instead of needing babysitting like the other agencies we worked with, he was not only completely dependable but also gave us sound suggestions on how to get better results, at the risk of us not needing him for the initial job we requested (absolute gem).
This has truly been the first time we worked with someone outside of our business that quickly grasped our vision, and that I could completely forget about and would still deliver above expectations.
I honestly can't wait to work in many more projects together!
Disclaimer
*The information this blog provides is for general informational purposes only and is not intended as financial or professional advice. The information may not reflect current developments and may be changed or updated without notice. Any opinions expressed on this blog are the author’s own and do not necessarily reflect the views of the author’s employer or any other organization. You should not act or rely on any information contained in this blog without first seeking the advice of a professional. No representation or warranty, express or implied, is made as to the accuracy or completeness of the information contained in this blog. The author and affiliated parties assume no liability for any errors or omissions.
