What is the purpose of superannuation?

Imagine a time when your working days are behind you, and you have the freedom to pursue hobbies, travel, or simply relax. Superannuation, or “super” as it’s commonly called in Australia, is designed to help make this vision a reality. It’s a long-term savings plan specifically geared towards providing financial security during retirement.

But what exactly is the purpose of superannuation? This article dives deeper into the core function of super and its role in shaping a comfortable retirement for Australians.

The Primary Goal: Income for a Dignified Retirement

The proposed objective for superannuation, as outlined by the Australian Treasury, clearly states its primary purpose: “to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way.” [3] This translates to building a nest egg that generates income throughout your retirement years, allowing you to maintain a decent standard of living. Super isn’t about amassing a vast fortune; it’s about replacing a portion of your pre-retirement income so you can continue to meet your needs and enjoy your golden years.

The Importance of Sustainability

The concept of sustainability is woven into the purpose of super. The system is designed to be long-lasting, ensuring its continued ability to provide for future generations. This sustainability is achieved through responsible investment strategies within super funds and a focus on growing contributions over time.

Complementing Government Support

Superannuation is not meant to be the sole source of income in retirement. The Australian government also provides the Age Pension, a means-tested social security payment for eligible retirees. Super acts as a crucial supplement, enhancing your overall retirement income and allowing for a more comfortable lifestyle.

Equity and Fairness

The proposed objective emphasizes achieving a “dignified retirement” in an “equitable” way. This acknowledges that not everyone will have the same income or contribution levels throughout their working life. However, the super system strives to offer a fair foundation for retirement security for all Australians, regardless of their career paths.

Beyond Dollars and Cents

The purpose of super goes beyond mere dollar accumulation. It’s about fostering peace of mind and a sense of security in your later years. Knowing you have a reliable source of income allows you to focus on enjoying your retirement to the fullest, free from financial anxieties.

Employer Contributions: A Shared Responsibility

A significant portion of your super comes from compulsory contributions made by your employer. The Superannuation Guarantee (SG) is a set percentage of your salary or wage that your employer must contribute to your super fund. This mandatory scheme ensures a steady flow of funds into your super account, even if you’re not actively making additional contributions yourself.

Your Role in Building Your Super

While employer contributions are a cornerstone of super, you also have the option to make voluntary contributions (concessional contributions) to boost your super balance. These contributions can be tax-deductible, offering an additional financial advantage.

Taking Control: Choosing Your Super Fund

You have the power to choose which super fund manages your retirement savings. Different funds offer varying investment options and fees. Researching and selecting a fund that aligns with your risk tolerance and investment goals is crucial for optimizing your super growth.


Superannuation serves a vital purpose in securing your financial future. It’s a collaborative effort between employers, the government, and individuals, all working towards a common goal: a dignified and comfortable retirement. By understanding the purpose of super and taking an active role in managing your contributions and fund selection, you can empower yourself to enjoy a fulfilling and financially secure post-work life.


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