In your 20s, 30s or 40s? The super rules that apply to you

There are lots of rules when it comes to our super system. But not every rule applies to you at every age, so it’s worth figuring out which ones have an impact in your particular age group.

The rules at different ages govern how much and when you can contribute to super, when you can get your hands on your savings, and how much tax you will pay. These are designed to stop people taking advantage of the generous tax benefits offered as part of Australia’s super system.

To make things a bit easier to understand, here’s SuperGuide’s simple guide to the super rules that apply if you’re in the early to mid stages of your working life.

Super rules if you’re in your 20s, 30s and 40s

The super system is designed to help you save money for your retirement over your entire working life. It holds money contributed by both you and your employer and will help supplement your income during your retirement years.

In the years leading up to age 50, there are no particular super rules applying specifically to your age group, but these are years when you should be paying attention to your super account to ensure it’s growing steadily and your fund is providing you with the services you need.

The rules that do apply to your super during these years are split between those covering when money goes into your super account (contributions) and when it comes out (withdrawing):

1. Contributing to your super

Superannuation Guarantee (SG)

Once you are aged 18 and are being paid $450 or more (before tax) in a calendar month and work more than 30 hours a week, your employer must pay SG contributions (9.5% in 2019/20 and 2020/21) into your super account.

If you don’t meet these conditions, your employer is not required to make SG contributions for you.

Once you meet these conditions, super is payable for all employees, whether you are working full-time, part-time or are casually employed. If you are a contractor paid ‘wholly or principally for labour’, you may be considered an employee for super purposes and entitled to SG payments.

If you work in a private or domestic capacity (for example, as a paid nanny), you still need to work more than 30 hours per week to qualify for employer-paid SG contributions.

For more information, read SuperGuide articles:

• Your simple guide to Superannuation Guarantee (SG) contributions
• Superannuation Guarantee rules for employers
• What to do if your employer doesn’t pay your super

Contributions caps

There are annual limits or caps on the amount of money you and your employer can contribute into your super account.

From 1 July 2017, the general concessional (before-tax) contributions cap is $25,000 for everyone, regardless of their age. (From 1 July 2018, you can also make ‘carry-forward’ concessional super contributions if you qualify, which includes having a Total Super Balance of less than $500,000.)

Your non-concessional (after-tax) contributions cap is $100,000, or $300,000 over a three-year period if you use the ‘bring-forward’ rule (in 2019/20 and 2020/21).

You do not need to meet a work test to make a non-concessional contribution, but your Total Super Balance must be under $1.6 million.

For more information, read SuperGuide articles:

• 2020/21 guide to concessional contributions (before-tax super contributions)
• 2020/21 guide to non-concessional contributions (after-tax super contributions)

Personal (or voluntary) tax-deductible super contributions

From 1 July 2017, most people in this age group – whatever their employment status – are able to claim a tax deduction for any personal voluntary contributions they make into their super account.

If you’ve got cash to spare and would like to boost your retirement savings, making a tax-deductible voluntary super contribution can be a great way to do it in during these years.

For more information, see SuperGuide article How do tax-deductible superannuation contributions work?.

First Home Super Saver (FHSS) Scheme

Buying your first home is usually a high priority during these years, so the government’s FHSS Scheme could be a useful way to save part of your deposit inside the lower-taxed environment of the super system.

Your FHSS contributions (up to $30,000) are counted towards your concessional or non-concessional super contribution caps.

For more information, read SuperGuide article How does the First Home Super Saver Scheme (FHSSS) work?

Self-managed super funds (SMSFs)

For many people in their 20s, 30s and 40s, it could be worth thinking about establishing your own SMSF if you are interested in taking more control of your retirement savings. However, it’s important to remember SMSFs must adhere to lots of rules and you will have the ATO looking over your shoulder.

An SMSF can have no more than four members at any one time. A member cannot be an employee of another member unless they are related.

You cannot be a trustee of an SMSF is you have been convicted of an offence involving dishonest conduct, been subject to a civil penalty under super law, are insolvent or an undischarged bankrupt, or been disqualified from acting as a trustee of a super fund.

For more information, read SuperGuide article What is a self-managed super fund (SMSF)?

2. Withdrawing your super

Getting your money

To access your super, you need to have both reached your preservation age and met a condition of release.

If you are in your 20s, 30s and 40s, your preservation age is 60 as you were born after 1 July 1964.

For more information, read SuperGuide articles:

• What age can I access my super (Preservation Age)?
• When can I access my super? All the conditions of release explained
• Early release of super on compassionate grounds

Hardship, compassionate and COVID-19 provisions

If you’re in your 20s, 30s or 40s, it’s possible to access some of your super early if you are suffering severe financial hardship, provided you meet strict eligibility conditions.

You can also apply for early release based on compassionate grounds.

On 22 March 2020, the federal government also announced a temporary measure allowing individuals impacted by COVID-19 to withdraw up to $10,000 in 2019/20 and a further $10,000 in 2020/21. This temporary withdrawal rule also has strict eligibility criteria.

For more information, read SuperGuide articles:

• Early release of super due to severe financial hardship
• Early release of super on compassionate grounds
• Early release of super due to COVID-19 (coronavirus)