Super Basics

Super Basics

Remember Claire (our Financial Best Friend - FBF)? She has recently returned to the workforce and although she thinks she is pretty knowledgeable and confident about her super, she thought it timely to do some reading and brush up on what she should know.

You may already know what she has learnt, but it's worth a quick read to confirm the basics. We’re calling it “Super Basics”.

Claire: When it comes to my super I can sometimes get confused by all the jargon and technical talk. In reality though, it’s fairly straightforward, which is why I've broken everything down into everyday plain English - well I hope I have, enjoy!

What is super?

Claire: Simply put, super is one way of saving for your future and your retirement.

What is its purpose?

Claire: The establishment of a compulsory superannuation system in Australia was in response to the financial challenges posed by a growing aged population. At the center of the government’s superannuation scheme is an intention to create an environment in which Australians can put money aside to provide for a better income in retirement.

How does it work?

Claire: In 1992, the Keating government formally introduced the national superannuation guarantee contributions (SGC) scheme. By law, all employers were forced to put a certain proportion of a worker’s salary into a superannuation account.

Initially, this started at 3% of a worker's salary, but rose to 9% by the early 2000s. In 2012, the Labor government legislated that the rate should increase a little each year until it reached 12% from mid-2025.

How is it set up?

Your employer should pay 9.5% of your salary into a super fund, through the Superannuation Guarantee (SG). You can also top up your super by making your own contributions, and where you are eligible the government may add to it through co-contributions and the low income super contribution.

The money deposited into your superannuation account is then invested and the growth reinvested by your superfund, , to help the balance grow.

The idea is that, when you retire and no longer receive an income, you can access your superannuation, rather than relying solely on the age pension, to support your lifestyle.

Who is entitled to super?

Claire: Generally, your employer must pay super for you if you are:

  • 18 years old or over, and are paid $450 or more (before tax) in a calendar month.
  • under 18 years old, being paid $450 or more (before tax) in a calendar month and work more than 30 hours in a week

In addition the Australian Tax Office (ATO) has this great tool that you can use to find out whether you are entitled to super guarantee contributions from your employer.

Claire’s top 3 tips to protect your super

  1. Locate any lost super here: https://www.ato.gov.au/forms/searching-for-lost-super/
  2. Follow these steps to consolidate any multiple accounts: https://moneysmart.gov.au/how-super-works/consolidating-super-funds
  3. Log in to your my.gov.au account to check your balance and fees.