How superannuation works in Australia

Employers must pay the superannuation guarantee for employees regardless of how much they earn or whether they are full-time, part-time or casual. The old $450-a-month minimum was abolished on 1 July 2022, which brought a large number of low-hours workers into the system for the first time. Employees under 18 must work more than 30 hours in a week to be eligible.

The rate is 12 per cent of ordinary time earnings from 1 July 2025 — the last step of a schedule that took it from 9 per cent over more than a decade. Ordinary time earnings means your normal hours' pay including most allowances and paid leave, but generally excluding overtime.

Contractors are a grey area that produces a great deal of unpaid super. If you are paid mainly for your labour under a contract, you may be an employee for superannuation purposes even if you have an ABN and both parties call you a contractor. Genuine businesses supplying a result, with their own tools and staff and the right to delegate, are not.

Super is not paid on top of the Fair Work minimum wage as a favour; it is a legal obligation, and unpaid super is a debt recoverable through the ATO.

You choose your own fund. Your employer must give you a standard choice form when you start, and must pay into whichever complying fund you nominate.

If you do not choose, the employer must ask the ATO whether you have a 'stapled' fund — an existing account that follows you between jobs. Only if there is no stapled fund can the employer use its own default. Stapling was introduced in 2021 specifically to stop workers accumulating a new account with every job, and it works: multiple-account numbers have fallen sharply.

The risk stapling creates is the mirror image: a poorly performing fund follows you for a whole career unless you act. The annual MySuper performance test run by APRA identifies funds that have underperformed their benchmark, and funds that fail twice are closed to new members. Check whether yours has ever failed.

Use the ATO's YourSuper comparison tool, which ranks MySuper products by fee and net return using regulator data rather than marketing material.

Every fund charges administration fees and investment fees, and most also deduct insurance premiums. Default insurance inside super typically includes death cover and total and permanent disability cover, and sometimes income protection.

That insurance is genuinely valuable for many people — it is usually cheaper than retail equivalents and requires no medical underwriting. But it is paid from your balance, and holding the same default cover in three different funds means paying three times for overlapping benefits. Consolidating accounts is largely about eliminating duplicate insurance premiums.

Before consolidating, check what insurance you would lose. If you have a health condition that would make new cover expensive or unavailable, closing the account that holds it can be a costly mistake. Move the balance, not necessarily the account, and get advice if you are unsure.

Most funds offer a range of investment options from conservative to high growth, with a MySuper default that is usually a balanced or lifecycle option. Younger members with decades until preservation age are, on the standard reasoning, better suited to higher-growth options — but that is a judgement about risk tolerance as much as time horizon.

Concessional contributions are made before tax: the employer's guarantee, salary sacrifice, and personal contributions you claim a deduction for. They are taxed at 15 per cent inside the fund, which is lower than the marginal rate for most earners, and they are subject to an annual cap. Unused cap amounts can be carried forward for five years if your total super balance is below a threshold.

Non-concessional contributions are made from after-tax money, are not taxed going in, and have their own higher annual cap with a bring-forward rule allowing several years' worth at once.

The government co-contribution matches personal after-tax contributions for lower-income earners up to a limit, and the spouse contribution offset provides a tax offset for contributing to a low-income partner's account. Both are widely unclaimed.

The First Home Super Saver Scheme allows eligible first home buyers to make voluntary contributions and later withdraw them, plus deemed earnings, for a deposit — using the concessional tax treatment of super to save faster than in a bank account. Caps and eligibility rules are specific; read them before contributing, because money that goes in for this purpose is otherwise locked away.

Preservation age is 60 for everyone born after 30 June 1964. You can access super from 60 if you retire or change jobs, and unconditionally from 65 whether working or not. From age 60, most withdrawals from a taxed fund are tax-free.

Early release is possible in narrow circumstances: severe financial hardship, specified compassionate grounds such as preventing foreclosure or paying for medical treatment, terminal illness, and permanent incapacity. Every one of these is applied for through the ATO or the fund and requires evidence.

Anyone offering to help you access your super early for a fee is running a scam. The promoter takes a cut, you pay tax and penalties, and the ATO treats illegal early release as a serious matter. There are no exceptions and no clever schemes.

Around ten billion dollars in lost and unclaimed super sits with the ATO. Check for it in ATO online services through myGov, where all your accounts and any ATO-held amounts appear in one list, and consolidate from there in a few clicks — after checking your insurance.