What is superannuation?

Superannuation, often called super, is a way to save for your retirement. You build up super while you are working to make sure you can have a comfortable retirement.

Super is a tax effective environment for your money:

• the account is held in your name
• both you and your employer can deposit money into your account
• your money will attract investment earnings,
• you can also hold some kinds of insurance inside your account, meaning you don’t pay for it out of your take-home pay
• and when you reach your ‘preservation age’, you can start drawing on these funds.

Your employer must pay 11% of your salary into a super fund. This is called the Super Guarantee and it’s the law. The Super Guarantee will gradually increase to 12% on 1 July 2025.

Why is superannuation important?

“Many of us will spend more than a quarter of our life retired, as people are now living until an average age of 86 years (if you’re male) and 89 years (if you’re female). Life expectancy is expected to rise to 91 for males and 93 for females by 2050.

So, you might need a lot more money for your retirement than you think. Unless you’re counting on a lotto win or growing your own personal money tree, super can help you enjoy your retired days by allowing you to maintain a good standard of living, which isn’t achievable by receiving just the Age Pension.”

-Association of Superannuation Funds Australia (ASFA)

How does tax on superannuation work?

Superannuation is treated differently to most other savings. For most people, super will be taxed at a lower rate than a similar investment outside super. The current tax rate is 15%.

If you’re employed, you may be able to claim a tax deduction for personal contributions you make to super. Rules however do apply so it’s best to seek advice given your specific situation.

What is the role of your employer?

If you’re entitled to receive super, your employer must pay 11% of your salary into a super fund at least every 3 months. This is called the Super Guarantee and it’s the law. The Super Guarantee will gradually increase to 12% in coming years as noted above. Additionally, from 1 July 2026, employers will be required to pay their employees’ super at the same time as their salary and wages. So if you get paid fortnightly, your super will also need to paid fortnightly.

What is the role of your super fund?

Once your superannuation fund receives your contributions it invests this money either in a default strategy or one you have chosen yourself.

Fees charged by the super funds may include general fees such as administration, member and investment, as well as optional extras including adviser fees and insurance premiums.

Superannuation funds also have an obligation to provide reporting on your account performance too. This could be through an annual statement which is posted or emailed to you. Most funds however also offer online reporting through a website or app.

What is your role in super?

It is important you:

• keep an eye on your superannuation payments from your employer
• consider making your own contributions, and claiming a tax deduction if appropriate
• make an investment choice that aligns to your goals
• keep an eye on your balance to ensure your money is working as hard as it can for your retirement
• make estate planning nominations on your account, so your fund knows where to direct your super balance should you pass.

If you are self-employed, you are responsible for making your own superannuation contributions.

How can we help you with superannuation advice?

The team at Alphington Private Wealth can help you understand, grow and manage your superannuation.

We can help you:

• Consolidate your super funds and help you save on fees
• Identify investment options tailored to your goals and risk profile
• Review your concessional and non-concessional contributions to super
• Identify strategies to help boost your superannuation
• Enjoy the benefits of salary sacrifice
• Understand your insurance options within superannuation
• Determine if you have the correct beneficiary nominations in place
• Determine whether a self-managed super fund (SMSF) is right for you.

To make an appointment, call us on 03 9038 9449 (Melbourne) or 08 8461 9191 (Adelaide) during business hours. Alternatively, complete the contact form and a member of our team will reach out to you to make an appointment for you. We can meet face to face in our offices, and in capital cities. Video meetings are also available.