Click here to jump to the latest returns for lifecycle super funds. Close to 70% of Australians with super in one of the major funds are invested in their fund’s MySuper option, the default option for employees who don’t choose a super fund. If you are a member of a retail fund, this is most likely a lifecycle product ... 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 that relate to How super works.
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 March 2019)
Note: For investment returns over 1 month, 3 months, 1 year, 3, 5, 7, 10 and 15 years to 31 March 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 (63 months), for the 5 main investment options offered by super ... Read more
What super contributions are best for me?
Working out how best to grow your super nest egg can be confusing and selecting the right mix of concessional (before-tax) and non-concessional (after-tax) contributions makes it even tougher. Whether you make small contributions over time, add a large lump sum, or use the potential tax advantages of contributing ... Read more
2019 Federal Election: ALP policies on super, tax and retirement
The 2019 Federal Election has been announced for 18 May, and although neither of the major parties have presented a formal election manifesto yet, Bill Shorten and Chris Bowen have both made a number of announcements that relate to superannuation and tax. It’s important to be aware of these policies and any potential ... Read more
Financial advice: Only 130 independent financial advisers in Australia
Note: This article is updated regularly when new financial advisers join the independence club (latest update April 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 have ... Read more
Superannuation Guarantee rules for employers
The Superannuation Guarantee (SG) is the official term for compulsory super contributions made by Australian employers on behalf of any full-time, part-time or casual employees who: earn more than $450 before tax in a calendar month, work in Australia (including temporary residents and working holiday makers), and are ... Read more
The magic of compounding interest
Compound interest is the eighth wonder of the world. He who understands it, earns it. He who doesn’t, pays it. This quote from history’s greatest scientist Albert Einstein sums up succinctly the beauty of compound interest, which allows you to earn interest on your interest. By understanding this basic principal, ... Read more
The Rule of 72, and how it can help you choose an investment
How long does it take to double your investment? The basic answer is way more simple than you’d expect. By applying The Rule of 72, you’ll be able to answer that question since it is an easy mathematical formula which can estimate the number of years required to double the invested money at a given annual compounded ... Read more
SMSFs: How to start a pension
One of the benefits of having a self-managed superannuation fund (SMSF) is its ability to pay members an income stream, or account-based pension. Of course any superannuation fund can do this, but paying a pension from an SMSF offers members more control and flexibility. The trustee can decide what assets will be ... Read more
New powers announced for APRA and ASIC
It's good news for Australians consumers, although long overdue. Legislation has just passed that increase the powers of the Australian financial industry’s two biggest regulators - the Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC). APRA APRA has been ... Read more
2019 ALP Federal Budget reply: Super, tax and related announcements
On Thursday April 4th opposition leader Bill Shorten delivered his reply to this week’s Federal Budget. In this article we look at Labor’s reply in relation to tax and superannuation measures, as well as announcements that affect and older Australians. This year it's more important than ever to analyse ALP's Budget ... Read more
Your simple guide to Superannuation Guarantee (SG) contributions
As employees, most of us see the regular note on our payment summary listing the amount for our employer’s Superannuation Guarantee (SG) contribution into our super account and rarely give it much thought. To help you understand it a little better, here’s SuperGuide’s simple explanation of the SG and what it means for ... Read more
What is the retirement age in Australia?
“What is Australia’s retirement age?” or “What age can I retire?” are common questions. The simple answer is “it depends”, because there is no such thing as a 'retirement age' in Australia, nor any laws that dictate when someone is allowed to retire. You can choose to retire whenever you want. A better question to ask ... Read more
2018/2019 guide to concessional contributions (before-tax super contributions)
Although it can be hard getting your head around all the different types of super contributions that go into your super account, concessional contributions are the ones you are mostly likely to have and are pretty straightforward to understand. Concessional contributions – what’s that mean? Concessional contributions ... Read more