Superannuation is Australia’s compulsory retirement savings system. Every employer must contribute a percentage of your pay directly into a super fund on your behalf, and that money is invested over your working life so you have savings to draw on in retirement. As of FY2025–26, the employer contribution rate is 12% of your ordinary time earnings.
This guide covers everything you need to know about how super works — from your first employer contribution to the day you retire.
What Is Superannuation?
Superannuation (or “super”) is a long-term savings system designed to fund your retirement. The Australian government makes it compulsory for employers to pay a set percentage of your earnings into a super fund. You can also make voluntary contributions to boost your balance.
Your super is invested by your fund on your behalf. Over a 40-year working career, compound investment returns can turn modest regular contributions into a significant retirement nest egg.
Super funds are required to be used for your retirement — there are strict rules about when and how you can access the money (see When Can I Access My Super?).
How Employer Super Contributions Work
The Superannuation Guarantee (SG)
The Superannuation Guarantee requires employers to contribute a minimum percentage of each eligible employee’s ordinary time earnings (OTE) into super. The rate has been gradually increasing and reached its current level of 12% in FY2025–26.
| Financial Year | SG Rate |
|---|---|
| FY2022–23 | 10.5% |
| FY2023–24 | 11% |
| FY2024–25 | 11.5% |
| FY2025–26 | 12% |
The 12% rate is the legislated final level under the current schedule.
Who Qualifies for SG Contributions?
Most Australian employees are covered. You qualify if you:
- Are 18 years or older, or are under 18 and work more than 30 hours per week
- Are a full-time, part-time, or casual employee
- Are an Australian resident or, in some cases, a temporary visa holder
The $450 per month minimum earnings threshold that previously excluded low-income workers was abolished on 1 July 2022. All eligible employees must now receive SG contributions regardless of how much they earn per month.
When Are Contributions Paid?
Currently, employers must pay SG contributions to your super fund at least quarterly. A major reform — Payday Super — will require employers to pay contributions on the same day they pay your wages, commencing 1 July 2026. This will significantly reduce the risk of unpaid super going undetected.
Types of Super Contributions
There are two main types of contributions you or your employer can make to super.
1. Concessional Contributions (Pre-Tax)
Concessional contributions are made from pre-tax income and are taxed at 15% inside super (compared to your marginal income tax rate, which could be up to 47%). They include:
- Employer SG contributions (the 12% your employer pays)
- Salary sacrifice — additional pre-tax contributions you arrange with your employer
- Personal deductible contributions — after-tax contributions you claim a tax deduction on by lodging a Notice of Intent with your fund
Concessional contributions cap (FY2025–26): $30,000 per year (this includes all employer and voluntary concessional contributions combined).
High earners (income above $250,000 including concessional contributions) pay an additional 15% tax on concessional contributions, making the effective tax rate 30%. This is known as Division 293 tax.
If you have unused concessional cap space from the past five years and your Total Super Balance (TSB) was under $500,000 at the prior 30 June, you may be able to carry forward that unused space and make catch-up contributions in a single year.
2. Non-Concessional Contributions (After-Tax)
Non-concessional contributions (NCCs) are made from money you have already paid income tax on. They are not taxed going into super.
Non-concessional contributions cap (FY2025–26): $120,000 per year
If you are under 75, you may be able to use the bring-forward rule to contribute up to $360,000 in a single year by pulling forward up to three years of NCC cap space. Your eligibility depends on your Total Super Balance:
| TSB at prior 30 June | Maximum bring-forward amount |
|---|---|
| Under ~$1.68M | $360,000 (3-year bring-forward) |
| ~$1.68M to ~$1.80M | $240,000 (2-year bring-forward) |
| $1.80M or more | $120,000 (no bring-forward) |
| $2.0M or more (Transfer Balance Cap) | $0 — NCCs not permitted |
Verify exact TSB thresholds with the ATO for FY2025–26 before acting.
Government Co-Contribution
If you are a low-to-middle-income earner and make personal after-tax contributions, the government may top up your super with a co-contribution of up to $500. Eligibility is income-tested — for FY2025–26, the benefit begins to phase out above approximately $45,400 and cuts off at approximately $60,400. Verify current thresholds on the ATO website before contributing.
Spouse Contributions
You can contribute to your spouse’s super account if your spouse earns below a certain income. This may give you a tax offset of up to $540. Contributions also help reduce the gender super gap over time.
Choosing a Super Fund
Australians can generally choose which super fund receives their employer contributions. If you do not make a choice, your employer will use a stapled fund — a fund previously associated with you from a prior job — or a default fund if no stapled fund exists.
Key things to compare when choosing a fund:
- Fees — administration fees and investment management costs (expressed as % of assets)
- Investment returns — look at long-term (7–10 year) net returns after fees, not just one year
- Investment options — growth, balanced, conservative, ESG, index options
- Insurance — default death and total permanent disability (TPD) cover included with most funds
- Services — online tools, financial advice access, app quality
The ATO’s YourSuper comparison tool lets you compare MySuper products. APRA also publishes an annual performance heatmap assessing both MySuper and choice products.
From 1 July 2024, the APRA annual performance test was extended from MySuper products to trustee-directed (choice) products. Funds that fail the test twice in a row must close to new members.
For more detail, see our How to Choose a Super Fund guide.
Investment Options Inside Super
Super funds invest your money on your behalf. Most offer a range of investment options with different risk and return profiles:
| Option | Typical asset mix | Best suited for |
|---|---|---|
| High Growth / Aggressive | ~95% growth assets (shares, property) | Long time horizon (20+ years) |
| Growth | ~75–85% growth assets | 10–20 year horizon |
| Balanced | ~60–75% growth assets | 5–10 year horizon |
| Conservative Balanced | ~40–60% growth assets | Shorter horizon |
| Capital Stable / Conservative | ~20–40% growth assets | Near-retirement or risk-averse |
| Cash | Term deposits, cash | Capital preservation only |
If you do not make a choice, your fund places you in a MySuper default option, which is generally a balanced or lifecycle option.
Younger Australians often have more time to recover from market downturns and may consider a growth or high-growth option — but this is general information, not personal advice. Speak with a financial adviser to determine what is right for your situation.
Super and Tax
Superannuation is one of the most tax-effective savings structures available in Australia. Here is how tax applies at each stage:
Contributions Phase
- Employer SG and salary sacrifice: taxed at 15% inside the fund (vs your marginal rate)
- Division 293 for incomes over $250,000: effective rate rises to 30%
- Non-concessional (after-tax) contributions: no tax on entry
Accumulation Phase (While Working)
- Investment earnings inside super are taxed at a maximum of 15%
- Capital gains on assets held more than 12 months: effective rate of 10% (one-third CGT discount)
Retirement (Pension) Phase
- Once you move your super into a retirement income stream (pension phase), investment earnings are generally taxed at 0%
- Important exception (from 1 July 2025): Under Division 296 tax, earnings attributed to balances exceeding $3 million are taxed at an additional 15% (effective 30% total). This applies to a small minority of high-balance members.
Withdrawals
- Withdrawals after age 60 are generally tax-free for most members
- Withdrawals before 60 may be subject to tax depending on the tax components of your super balance
Accessing Your Super
Super is locked away until you meet a condition of release. The main ones are:
- Reaching preservation age and retiring — your preservation age depends on when you were born (generally age 60 for those born after 30 June 1964)
- Reaching age 65 — you can access super regardless of employment status
- Transition to Retirement (TTR) — once you reach preservation age, you can start a TTR income stream while still working (restrictions apply)
- Severe financial hardship or compassionate grounds — limited early access in exceptional circumstances
For most Australians, the practical access point is age 60, when withdrawals also become tax-free.
For full detail on access rules, see When Can I Access My Super?
Transfer Balance Cap
There is a limit on how much super you can transfer into tax-free pension phase. This is called the Transfer Balance Cap (TBC), currently set at $2.0 million in FY2025–26. The cap is indexed in $100,000 increments in line with CPI.
Super above the cap can remain in accumulation phase (where earnings are taxed at 15%) or can be withdrawn.
Key Super Rules to Know
| Rule | Detail |
|---|---|
| SG rate | 12% of ordinary time earnings (FY2025–26) |
| Concessional cap | $30,000/year |
| Non-concessional cap | $120,000/year |
| Bring-forward rule | Up to $360,000 over 3 years (if eligible) |
| Transfer Balance Cap | $2.0 million |
| Payday Super | From 1 July 2026 — contributions with each pay cycle |
| Division 296 tax | From 1 July 2025 — 30% effective rate on earnings above $3M balance |
| Access age | Generally 60 (preservation age) for those born after 30 June 1964 |
Super Through Key Life Events
Changing Jobs
Your super stays in your fund when you change jobs. Since 1 November 2021, your super is “stapled” to you — your new employer must use your existing fund unless you make a different choice. This prevents the creation of multiple unintended super accounts.
Taking Time Out of the Workforce
Periods out of work (caring, travel, unemployment) don’t affect your existing super balance, but no new employer contributions flow in during that time. Women, in particular, are affected by the gender super gap due to career breaks.
Leaving Australia
If you worked in Australia on a temporary visa and are leaving permanently, you may be able to claim your super as a Departing Australia Superannuation Payment (DASP). Tax is withheld — the rate depends on the components of your super balance.
Frequently Asked Questions
How much super will I have at retirement? This depends on your balance today, your contributions, investment returns, fees, and how long until you retire. As a rough guide, ASFA estimates a comfortable retirement for a single person requires approximately $595,000 in super (FY2024–25 figures). Use the MoneySmart super calculator to model your own situation. Returns will vary — past performance is not a reliable indicator of future performance.
What happens to my super when I die? Your super does not automatically form part of your estate. It is paid as a death benefit according to your fund’s rules and any binding death benefit nomination you have made. You should nominate a beneficiary with your fund.
Can I have multiple super accounts? Yes, but consolidating into one fund can reduce fees and simplify management. You can consolidate via myGov. Check that you won’t lose valuable insurance cover before rolling over.
What is the difference between accumulation and pension phase? Accumulation phase is when you are saving — contributions come in and earnings are taxed at 15%. Pension phase is when you start drawing down your super in retirement — earnings are generally taxed at 0% (with the Division 296 exception for balances over $3M from 1 July 2025).
What is a MySuper product? MySuper is a simple, low-fee default super product. All employer SG contributions go into a MySuper product if you haven’t made an investment choice. Funds must meet APRA standards to offer MySuper products.
Where to Learn More
- Salary Sacrifice Super Explained
- How to Choose a Super Fund
- Super Contribution Limits Australia
- SMSF — What Is a Self-Managed Super Fund?
- Super and Tax — Complete Guide
- ATO: Superannuation
- ASIC MoneySmart: Super
This article provides general information about superannuation in Australia. It does not take into account your personal financial situation, objectives, or needs. For advice tailored to your situation, speak with a licensed financial adviser. You can find one through the ASIC financial advisers register or MoneySmart.