What is superannuation?

Superannuation, often shortened to “super,” is a cornerstone of Australia’s retirement income system. It’s essentially a long-term savings plan funded by both employers and employees, designed to provide financial security after you stop working. Let’s delve deeper into what super is, how it works, and the benefits of taking charge of your superannuation.

Building Your Nest Egg: How Super Works

Australia has a mandatory superannuation system. This means employers are required by law to contribute a percentage of your salary (currently 11%, rising to 12% by 2025) into a super fund on your behalf. These contributions are made on top of your regular wages and are held in a separate account.

Super funds are investment vehicles that pool your money with other members’ contributions. These funds are then managed by professional investment teams who aim to grow your super balance over time through various investment strategies.

You also have a role to play in growing your super. Here’s how you can contribute:

  • Salary sacrificing: This involves agreeing to have a portion of your pre-tax salary redirected to your super. This can be a tax-effective way to boost your super balance.
  • Voluntary contributions: You can make additional contributions to your super from your after-tax income, up to certain limits.

Accessing Your Super: When and How

You generally can’t access your super savings until you reach your preservation age, which varies depending on your date of birth. Currently, it sits between 55 and 60 years old. Once you reach this age, you have more flexibility in how you access your super. You can choose to:

  • Take a lump sum payment and invest it elsewhere.
  • Opt for an income stream, which provides regular payments like a pension.
  • Combine both a lump sum and an income stream.

There are some limited circumstances where you can access your super before reaching your preservation age, such as severe financial hardship or terminal illness.

The Power of Taking Charge

While superannuation is a compulsory system, it’s important to be proactive in managing your super to maximize its potential. Here’s how you can take charge:

  • Choosing a Super Fund: You have the right to choose which super fund holds your savings. Research different funds and compare their fees, investment performance, and track record.
  • Consolidating Multiple Accounts: If you’ve changed jobs throughout your career, you might have multiple super accounts. Consolidating them into one account can simplify management and potentially reduce fees.
  • Understanding Your Investment Options: Super funds offer a range of investment options with varying risk profiles. Choose an option that aligns with your risk tolerance and retirement goals.
  • Making Additional Contributions: Consider making voluntary contributions to boost your super balance and improve your retirement income.

Benefits of a Healthy Super Balance

A healthy super balance can significantly enhance your quality of life in retirement. Here’s why:

  • Financial Security: Superannuation provides a steady income stream when you’re no longer earning a regular salary.
  • Freedom and Independence: Having a sufficient super balance allows you to maintain your desired lifestyle and pursue your passions in retirement without financial worries.
  • Peace of Mind: Knowing you have a secure financial future can reduce stress and allow you to focus on enjoying your golden years.


Superannuation is a powerful tool for building a secure and comfortable retirement. By understanding the system, taking charge of your super, and making informed decisions, you can ensure a bright financial future for yourself when it’s time to hang up your work boots. Remember, the earlier you start planning and contributing to your super, the greater the benefit you’ll reap in the long run.

Additional Resources:


Leave a Reply

Your email address will not be published. Required fields are marked *