How super works
Superannuation (or ‘super’) is money that is put aside during your working life to provide an income to replace your wages or salary when you wind-down work. Understanding your super early can set you up so you'll be well placed financially when you retire.
Key learnings covered in this topic
- What is super?
- How much super you need to retire
- How to grow your super
- When you can access your super?
Super is money that your employer must pay a percentage of your salary into a super fund (paid at least once every quarter). Compulsory super was first introduced for working Australians in 1992 at a rate of 3%.
Your employer is generally required to pay super if you are:
- Employed on a full-time, part-time or casual basis (even if you’re only working in Australia temporarily)
- 18 and over, or
- Under 18 but working more than 30 hours per week.
If you’re self-employed, a sole trader or in a partnership, you can choose to make personal super contributions into a super fund to save for your retirement. So any super you pay to yourself will be up to you, rather than a legal requirement.
If your employer pays your super, your employer is required to make superannuation guarantee (SG) contributions of at least 11% of your before-tax salary, and this is legislated to increase incrementally to 12% by July 2025. Importantly, this money doesn’t come from your pay packet – it’s in addition to your regular salary or wages. Your super fund invests that money, giving it the best opportunity to grow – to then be made available to you when you retire.
If you’re self-employed, a sole trader or in a partnership and choose to make personal super contributions, you should review how much income you might need in retirement and make the contributions to your fund.
Choosing a super fund is an important decision and there’s several things to consider when choosing the right fund for you. This includes looking at a fund’s investment performance, their fees, their insurance offering and retirement options, and the type of fund it is (e.g. an industry fund or retail fund).
The amount of super you'll need when you retire will depend on:
- Your big costs in retirement (paying off your mortgage/paying rent, food, medical costs, aged care) and
- The lifestyle you want (travel, entertainment, eating out).
To help estimate the superannuation balance you will require, the ASFA Retirement Standard provides a comprehensive breakdown of expenses for a comfortable and modest lifestyle, for couples and singles to maintain a healthy, vital and connected lifestyle in retirement.
You also have access to our Retirement income calculator to determine how your super is tracking and how much income you might have in retirement to fund your lifestyle.
All super funds charge fees and they do vary. Fees are either a dollar amount or a percentage, or both, and are usually deducted monthly. They can include administration fees, investment/performance fees, indirect costs, insurance fees, switching fees and advice fees.
Our low fees at CareSuper are driven by strong long-term growth on your investment, to maximise your super balance. It’s the overall benefit to you that counts.
Super funds typically offer three types of insurance for members:
- Death insurance (also known as life insurance)
- Total and permanent disablement (TPD) insurance and
- Income protection insurance.
Insurance through your super fund can be an affordable and tax-effective way to protect you and yours if something hits you out of the blue. With CareSuper, you have access to group rates with fees deducted from your super account, and our age and gender-based pricing model helps us deliver value for you.
Insurance through super can be an affordable and tax-effective way to protect you and yours if something hits you out of the blue. As a CareSuper member you have access to group rates with fees deducted from your super account, and our age and gender-based pricing model helps us deliver value for you.
When a contribution is made to your super, it’s invested on your behalf according to your investment choice(s). If you haven’t made an investment choice, your super will be paid to our Balanced (MySuper) option.
Investments will be made to one or more asset classes, including shares, property, fixed interest and alternatives.
As a CareSuper member, you have access to 12 different investment options, each with different targets for returns and levels of investment risk, plus a Direct Investment option. This variety lets you mix and match your investments to suit your own goals.
At CareSuper, we invest with one goal in mind: to help you achieve the best possible lifestyle in the future. How do we invest for that? We use an actively managed and long-term strategy – driven by a proven investment philosophy. Plus, our team of experts is always looking for ways to boost your net returns.
It's worth taking the time to check your options and decide what's right for you. The investments options you choose can make a big difference to how your super grows.
When choosing your investment option, you’ll need to consider:
- Your age and how far away from retirement you are
- How comfortable you are with investment risk
- How long before you will be able to access your funds.
There are several ways you can give your super a boost.
Combing your super accounts to the one low-cost super account, contributing extra to your super and ensuring you’re in the right investment option(s) are just a few ways to boost your super. See our tips to help grow your super.
What’s the benefit of growing your super? Your employer super contributions and investment earnings alone may not be enough to fund the lifestyle you want when you retire. You can give it a helping hand and set yourself up for a better life after work.
You can access your super when you meet your preservation age and a condition of release. This includes:
- Reach your preservation age and retire
- Reach your preservation age, continue to work and set up a transition to retirement strategy Are 65 years old (even if you haven’t retired).
There are certain circumstances where you can get early access to your super, such as specific medical circumstances, financial hardship, or if you're eligible for the First Home Super Saver Scheme.