Whether you’re intending to settle down in Australia as a permanent resident or are seeking temporary work as a working holiday maker or international student, you’ll most likely be paid superannuation.
If you’ve already received some documentation or information about superannuation from your employer, or you’re looking for work, we’ve put together a guide to understanding superannuation in Australia so you know exactly what’s going on with your money.
What is superannuation?
The term ‘superannuation’ might be an unfamiliar one, as Australia is the only country that uses it. In other countries, it’s usually known as ‘pension’.
Superannuation, or ‘super’, is money that is put aside and saved in a fund in preparation for retirement. It is part of the Australian pension system designed to give you a regular income throughout your retirement once you stop earning a wage.
The Association of Superannuation Funds of Australia (ASFA) echoes the importance of super when it comes to retirement. “Super is still the best game in town for funding your retirement,” says ASFA CEO Dr Martin Fahy. “Concessional tax treatment of superannuation leads to more dollars of savings being invested and higher after-tax investment returns from all forms of investment compared to being directly held by individuals.”
Generally speaking, super can be accessed upon retirement (if you become a permanent resident of Australia) or when you leave Australia (if you’re on a Working Holiday visa, Student visa or another temporary visa).
For more on understanding super, you can head to our superannuation learning centre. You can also read our guide to technical super terms.
How does super work?
Superannuation is managed by a superannuation fund, which is an organisation that can hold, manage and invest your super until you can access it.
Your superannuation is steadily topped up through regular contributions to that fund. The money in your super is then used by your super fund to invest in things like property or shares. The idea behind this is to provide returns on the money sitting in your super account, with the goal of growing your balance over time to help fund your retirement.
Superannuation contributions can be made a few different ways.
If you’re employed by a company, your employer must make contributions to your superannuation on your behalf. This applies whether you are working full-time or part-time, or on a casual basis where you’re over 18 and earn more than $450 in a month before tax.
Currently, your employer has to pay an amount equal to 9.5% of your salary into your super account, on top of your usual earnings. This is known as the Superannuation Guarantee.
The amount that your employer contributes is based on your ‘ordinary time earnings’, which are made up of your ordinary hours of work, as well as over-award payments, some types of paid leave, bonuses, commissions, and allowances.
If your salary specifies that it does not include super, it means that the amount that your employer must contribute is on top of your ordinary time earnings. You might see this referred to as your salary ‘plus super’ or ‘excluding super’. So, if your ordinary time earnings are $75,000 per year, your employer must contribute an extra $7,125 to your super.
Sometimes, your salary package is inclusive of super. This can be referred to as your salary ‘including super’. That means that if you’re earning $75,000 including super, your ordinary time earnings are $68,493.15 and your employer is contributing $6,506.85 to your superannuation.
If you are a casual worker, the super contribution will be 9.5% of your earnings. If you make $450 in a week, for example, your employer will contribute $42.75 to your super. If you make $500 the next week, your employer will contribute $47.50 to your super.
Just note that there is an Australian super contributions tax of 15% for employer contributions, which is automatically taken out.
Unfortunately, sometimes businesses fail to meet their obligations to pay super to their employees – see ‘Why it pays to check your employer is making super contributions’. You can always check how much super has been paid by looking at your payslip or accessing your super account to check the balance.
You can also top up your superannuation by making contributions yourself. There are a few different ways you can make extra super contributions.
Salary sacrificing involves having a portion of your income “sacrificed” into your superannuation account instead of your pay check. This is on top of the regular contributions made by your employer.
You can also make additional voluntary contributions to your super. This might be a lump sum taken from a cash bonus, or it could be a regular amount you put into your super each month.
To read more about the different types of contributions you can make, check out our guide to making extra contributions to your super.
Can I choose my own super fund?
In most cases, you can choose your own super fund – as long as your chosen fund complies with super regulations. The only situations in which you can’t pick your own super fund are where you’re covered by a particular industrial agreement or if you’re part of a defined benefit fund. You can ask your employer whether either of these conditions apply to you.
You have the right to choose your own fund, but it’s not compulsory. If you don’t select one, your employer still has to make contributions, except they’ll automatically be paid into the default fund elected by your employer.
There are several superannuation funds to choose from in Australia, so you’ll need to do a bit of research to find one that suits your needs. Consider things like fees, how your money is invested through the super fund, what insurance options are included in the fund, and any other benefits that the fund offers.
ANZ Smart Choice Super is a low-cost and flexible product that allows you to choose the types of investments you want to make through your superannuation. You can also opt for different levels of insurance and easily manage your super through the ANZ App. Find out more about ANZ Smart Choice Super.
I have multiple superannuation accounts – what do I do?
Especially if you’re on a Working Holiday visa, you might move between several jobs during your time in Australia. Unless you nominate the same super fund with each new job, you may have multiple super funds under your name.
If this is the case, it’s definitely worth consolidating your super so that all of your money is with one fund. This will ensure you can avoid paying separate fees for each fund, and there’s less to keep track of. As a consequence, there’s a lower chance of forgetting about any of your super when you leave Australia.
You can consolidate your super through the Australian Tax Office (ATO), or you can contact your super fund – they might provide a service where they do it on your behalf. At ANZ, we make it really easy to consolidate your super and find any lost super hiding in other accounts. The ANZ Smart Choice Super account offers a straightforward ‘Find my super’ tool that will instantly locate all of your super accounts.
For more information on sorting out multiple super accounts, we’ve put together a handy guide to consolidating your super.
When can I access my super?
If you’re planning on settling in Australia long-term as a permanent resident and intend to have an Australian retirement fund, the normal super rules will apply to you. This means that, typically, you can access your super when you reach what is called ‘preservation age’. This is between 55 and 60 years old depending on when you were born. When you reach this age, you can get access to your super as long as you’re permanently retired. Otherwise, you can access it once you turn 65.
If you’re on a temporary visa, we’ve outlined below exactly what happens to your super when you leave the country.
What happens to my super when I leave the country?
If you’re on a Working Holiday visa, Student visa or any other type of temporary visa where you’re getting paid and you plan to leave Australia permanently, you can apply to take your super with you and access your Australian pension overseas. This involves applying for a departing Australia superannuation payment (DASP), which is paid as a lump sum.
In order to claim a DASP, you’ll need to meet the following requirements:
- You’re not an Australian or New Zealand citizen, nor are you an Australian permanent resident
- You entered Australia on a temporary visa (excluding subclasses 405 and 410)
- Your visa is no longer valid – whether through expiration or cancellation
- You’ve left Australia
Note that there is a departing Australia superannuation payment tax. Depending on the type of visa you were on in Australia, you’ll be taxed at a different rate when your DASP is paid out. The DASP is made up of two portions: the taxed element and the untaxed element. For any temporary visas other than the Working Holiday visa, the tax rate for the taxed element is 35%, and the tax rate for the untaxed element is 45%. If you’re on a Working Holiday visa, you’ll be taxed at the rate of 65% for both elements.
It’s best to apply for the DASP within six months of leaving Australia. After this period and if your visa has expired, your super fund will transfer your super to the Australian Tax Office (ATO) as unclaimed super money. You can still claim your super, but there is a different process involved.
You can apply for a DASP by filling out an application form (PDF, 137 kB). If you’re claiming from several funds, you’ll have to fill out a new form for each fund. If your money has been transferred to the ATO, you’ll need to use a different form.
Make superannuation simple and straightforward
Looking for a superannuation account that makes it easy to manage your super in Australia? ANZ Smart Choice Super offers low fees, insurance included as well as the option to add extra insurance, and a simple tool to bring all your other super into one fund. For more information on ANZ Smart Choice Super, head to our frequently asked questions page.
Manage your super with ANZ
ANZ Smart Choice Super offers the flexibility to fit with your changing needs and life stages. With the ability to bundle your banking and super into one account and track your super online or through the ANZ app, ANZ Smart Choice Super is a straightforward and convenient option for managing your super. Find out more about ANZ Smart Choice Super or read about how ANZ Smart Choice Super has performed.