Super for beginners: Top 10 must-know facts

Nearly eight years ago, in January 2009, we launched the SuperGuide website, and in March 2009 we published the first monthly SuperGuide newsletter. Since that time we have received thousands of questions, from our millions of visitors, on different aspects of superannuation. We try to represent as many questions as possible in the articles we publish, while also ensuring that we cater for those readers who are just beginning their superannuation education.

The updated Top 10 must-know facts or super rules listed below are a handy guide for those seeking to understand how the super rules work, and the list also serves as a refresher for those readers who may be more familiar with the super rules. You can find more information about each of the super rules outlined below by clicking on the related link in each fact, or by using the search function (see the top of the SuperGuide website).

Top 10 must-know super rules

1. Superannuation guarantee

Your employer must contribute money to your member account in a super fund on your behalf. This obligation is imposed on employers under the superannuation guarantee (SG) laws. Compulsory employer contributions are often called SG contributions, and the current SG rate is 9.5%. The SG contributions count towards your concessional contributions cap (see Facts 2 and 5 below). For more info on SG see SuperGuide article Superannuation Guarantee: 10 facts about your SG entitlements.

2. Tax on concessional (before-tax) contributions

Your employer’s compulsory SG contributions and any before-tax contributions that you voluntarily choose to make (known as concessional contributions) are taxed at a maximum rate of 15 per cent when the super contributions enter the super fund. In comparison, a person earning more than $37 000 a year can expect to pay at least 32.5 per cent income tax for the 2016/2017 year on that same income (and up to 47 per cent plus Medicare levy, if she earns more than $180,000), when she chooses not to make before-tax super contributions (for more info see SuperGuide article Super concessional (before-tax) contributions: 2016/2017 survival guide. Two special rules apply to the following groups of Australians:

a. Contributions tax refund for lower-income earners

Since 1 July 2012, if you earn less than $37,000 you are likely to get the contributions tax deducted from your employer’s SG contributions, repaid into your super account, up to a maximum of $500. This refund is known as the Low Income Super Contribution. For more info on the LISC see SuperGuide article Super tax refund for lower-income earners to extend beyond June 2017.

b. Extra 15% tax on contributions for high-income earners

Since July 2012, if your adjusted taxable income is more than $300,000 a year, the taxman will take 30% of your concessional contributions in the form of tax: 15% as contributions tax, and 15% as Division 293 tax. For more info on this extra tax see SuperGuide article Double contributions tax for more high-income earners.

3. Special tax rate on investment earnings

Earnings on your super fund’s investments are also taxed, but at no more than 15 per cent. If you’re drawing a pension from your super account, then the earnings on the savings in your pension account are exempt from tax. For more info on super taxes see SuperGuide article Super for beginners, part 17: Four must-knows about super’s tax rules.

4. Co-contribution

If you make non-concessional (after-tax) contributions to your super fund, depending on your level of income, the government may put some tax-free money into your super fund for you. This is known as the co-contribution scheme. For more info see SuperGuide article Cashing in on the co-contribution rules (2016/2017 year).

5. Contributions caps

The amount of super contributions that you can make each year is capped, unless you are happy paying extra tax. If you make super contributions that exceed the contributions caps, and you choose to withdraw those excess contributions, then you will have to pay penalty tax, known as excess contributions tax. Alternatively, you can withdraw the excess contributions from your super account. For more info on contributions caps and excess contributions see SuperGuide articles Superannuation contributions: Wearing two caps for 2016/2017 year and Excess contributions rules: A quick summary.

6. Fund choice

In many cases you can choose the super fund you want your employer’s SG contributions paid into. If you don’t choose your super fund, your employer chooses for you. In certain instances, your super fund may be determined by an employment agreement or industrial award. For more info on choosing a super fund see SuperGuide article Fund choice: Comparing super funds in 8 steps.

7. Investment choice

In most cases you can decide how you want your money invested by the super fund, by choosing from your super fund’s investment options. If you don’t make an investment choice, then your super money is invested in a default investment option. The default option is typically invested in range of assets, known as a balanced investment option, although some super funds call the default option, a growth option. Investments are spread across higher risk and lower risk assets as a means of maximising investment returns while managing the risk that some investments may lose money. For more information on investment choices see SuperGuide special sections Investment optionsSuperannuation performance (investment returns) and Is my super fund performing?

8. Member reporting

Your super fund must send you regular reports (at least annually) on the fund’s performance, and on your own super account’s performance. Your super fund must also state fees charged, and show you any other transactions on your super account (such as the deductions for insurance premiums and taxes). For more info on what your super account’s report contains, see SuperGuide article Fund choice: Comparing super funds in 8 steps.

9. Preservation

Your money is preserved in super. That means you generally can’t take your money (your benefits) out of the super fund until you retire at or after your preservation age (from age 55 if born before July 1960, and if born after June 1960, at least age 56 and up to age 60, depending on your date of birth), or when you satisfy another condition of release. To be allowed to withdraw your super you must, in super’s technical language, satisfy a condition of release and these conditions are very specific (see SuperGuide article: Accessing super early: 14 legal ways to withdraw your super benefits).

10. Tax-free for over-60s

When you retire on or after the age of 60, you pay no tax on your superannuation benefits, unless you’re a long-term public servant. And there’s more! When you receive a pension (which super funds may also call an income stream) from your super fund, the earnings on the assets that finance your pension are exempt from tax, even when you retire before the age of 60 (for more information, see SuperGuide articles Tax-free super for over-60s, except for some and Retiring before the age of 60: the tax deal).


  1. My wife cashed in her non-preserved benefit a number of years ago. She was part of a local council super fund she had been a member from 1979. When she received her non-preserved benefit the fund kept all other contributions. I thought any she would have entitled to roll those benefits over into another fund?



  2. Is super even worth it? Intrust super charges me more in admin fees than they actually make for me.

    Leaving me a net loss of 24% of my super each year.

    Isn’t there anyway to get my super to sit in a bank account safe from these vultures and ridiculous admin fees?

  3. Hi, My question is, I have reached my preservation age, have been diagnosed with progressive arthritis which is and will continue to impair my ability to do my job. I am currently on long service leave and wish to access part of my super, up to $10,000 to cover in part my medical costs and seeking appropriate treatment, while supporting my partner who is only part time employed, mortgage etc.
    I will be seeking to reduce my hours and duties, once I return to work if the work environment will accomodate this arrangement. This is by no means guaranteed and I may have to retire.
    Any advice is appreciated.

  4. My wife (63) and I (62) are returning to UK after 4 years on a 457 visa.

    Will we pay tax on our superannuation if we cash it in immediately or is it best to leave it until a later date?

  5. Hi I’m 26 years old and this is the first time I have thought about my super and have looked it up online BUT I still don’t know which super fund to go with?? Can you advise me as to which super fund I should consider?

    My next statement will have you shaking your head at me, I know! Currently I have contributions in THREE different super accounts with different companies. I want to consolidate them into one account but I don’t know who to go with? And as much as I have researched and surfed the net to help me choose I still don’t know which super fund is the better choice.

    Can you point me to the right direction or suggest few names for me to look up?

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