The financial services industry will continue to fail super fund members and financial advising clients unless two key elements change in how the financial industry is regulated (and in turn how the industry operates). Although the recent Financial Services Royal Commission (FSRC) identified that ASIC needed to be ... Read more
How super works
A Super Guide
Your superannuation account exists only because you, your employer or someone else makes regular cash contributions to your super fund. A superannuation fund is an investment vehicle that receives special tax concessions from the federal government. The cash that is held in your superannuation account is then invested in assets to generate returns for your eventual retirement. On retirement, you can choose to take a regular income stream (super pension) from your super account.
Apart from the return on your super investments, and the costs or fees your super fund charges against your super account, a healthy superannuation payout on retirement depends on the amount your employer (or you) contributes to your fund throughout your working life. Your super life starts when you join (or your employer joins you, on your behalf) a superannuation fund.
When you understand the basics, you can forge a strong financial future for yourself through superannuation. A weekly, monthly or quarterly contribution to a super fund can provide you with multiple investment choices and tax breaks, and insurance protection if you become disabled before you retire. You can considerably boost your final superannuation benefit by making your own contributions to your fund. You may also have the flexibility to structure your contributions in a way to reduce the amount of income tax that you pay.
In this section you can discover the mechanics of the superannuation system, including the latest super rates and thresholds, a suite of articles designed especially for super for beginners, the compulsory employer super contributions rules, resources on what to consider when comparing super funds, how-to super guides, and helpful retirement reckoners. Click on the links directly below to access the following topics about how super works:
- Latest super and retirement changes
- Super for beginners
- Super rates and thresholds
- Superannuation strategies
- Superannuation Guarantee rules
- Comparing super funds
- How-to Super Guides
- Superannuation Q&As
- Super Quizzes
Below are some of our key How super works articles:
Set out below are all SuperGuide articles referring to How super works.
Lifecycle investment options (returns to January 2019)
If you haven’t chosen your own super fund, or you haven’t actively selected an investment option, then you need to be aware that your super money may not be invested within a traditional default growth investment option (which has at least 60% of your super money invested in growth assets such as shares and listed ... Read more
Financial advice: Only 127 independent financial advisers in Australia
Note: This article is updated regularly when new financial advisers join the independence club (latest update February 2019). A financial adviser does not have to be a member of the IFAAA to join the SuperGuide list, provided they can declare that they satisfy the requirements of being an independent adviser (we now ... Read more
Monthly Superannuation Returns Performance Reckoner (for 5 investment options)
You can find out the median monthly investment return of the 5 main investment options available in Australian super funds for at least the past 9 calendar years (from January 2014 through to the latest monthly results). You can also check out our SuperGuide article Investment performance: Latest super returns (to ... Read more
Investment performance: Latest super returns (to January 2019)
Note: For investment returns over 1 month, 3 months, 1 year, 3, 5, 7, 10 and 15 years to 31 January 2019 for 5 main investment options offered by super funds, see Table 1 later in the article. For month-by-month performance data, going back 5 years (61 months), for the 5 main investment options offered by super funds, ... Read more
Retirement performers! Top 30 pension funds over 5 years
Note: This article lists the 30 top-performing pension (retirement) funds over 5 years to 31 December 2018. For the top-performing super funds, see SuperGuide article Super stars! Top 30 super funds over 5 years. Discovering the best-performing super funds is fascinating reading for any Australian interested in how ... Read more
Super stars! Top 30 super funds over 5 years
Note: This article lists the 30 top-performing super funds over 5 years to 31 December 2018. For the top-performing pension (retirement) funds, see SuperGuide article Super performers! Top 30 pension (retirement) funds over 5 years. The investment performance articles on the SuperGuide website are some of the most ... Read more
Super tax tables: When OVER 60 years of age
The summary tables below contain the following information on super taxes for over-60s: Table 1: Contributions taxes Table 2: Earnings taxes (accumulation phase) Table 3: Benefit payment taxes for over-60s (taxed funds). All super funds except certain public sector funds. Table 3 outlines the tax treatment ... Read more
Tax-free super for over-60s, except for some
If you withdraw your super benefits after you turn 60 years of age, you can expect to pay NO tax on those super benefit payments, unless you are a member of certain types of public sector super funds, or you receive defined benefit pension of more than $100,000 a year. Note: Since 1 July 2017, certain recipients of ... Read more
Super tax tables: When UNDER 60 years of age
The summary tables below contain the following information on super taxes for under-60s: Table 1: Contributions taxes Table 2: Earnings taxes (accumulation phase) Table 3: Benefit payment taxes for under-60s (taxed funds). All super funds except certain public sector funds. Table 3 outlines the tax treatment ... Read more
Retirement: 3 ways of taking super benefits before the age of 60
When you retire early, you’re going to have to make a few decisions about your superannuation benefits. The tax implications of your retiring before the age of 60 can depend on whether you take your super as a lump sum and/or pension. Are you taking your super as a lump sum, a super pension (also known as a super ... Read more
Retiring before the age of 60: the tax deal
If you retire before the age of 60, your super benefit payments are likely to be subject to tax — but not always. With the right structure, and usually with expert advice, many Australians retiring early can end up paying no tax. If you’re willing to wait until you turn 60 before you retire, you can automatically ... Read more
Guide to minimum pension payments rules (including calculator)
Once you retire and reach your preservation age you can start to withdraw your superannuation as an income stream, a lump sum or both. Most retirees choose to take at least part of their super as an income stream because it provides them with regular tax-free payments until their money runs out. A super income ... Read more
Early release of super due to severe financial hardship
Accessing super early due to severe financial hardship is possible under Australian law, provided that you meet strict eligibility conditions and your super fund allows it. Normally you can only access your super once you’ve reached your preservation age and met a condition of release (such as retiring from the ... Read more
How super works: A beginners guide to superannuation
Simply put, superannuation (or super) is money you put in a super fund while you are working to provide income later in life when you retire. Given the average Australian can expect around 20 years of retirement, and the Age Pension is designed to provide only the most basic needs, the more you can save now the more ... Read more