Whether you’re just entering the workforce or want to learn more about building your retirement savings, you may be asking the question: what is superannuation? Well, allow Monzi to explain. Through our beginner’s guide to superannuation, we’ll explore what superannuation is, what to look for in a super fund and how you can maximise your savings. Let’s go.
Please note, certain ideas and products presented in this article may not be offered by Monzi nor the lenders we work with. This article presents only general information. Consider seeking professional financial, taxation, legal or other advice to check how the information and ideas presented on this website relate to your unique circumstances.
What is superannuation?
Superannuation, often just referred to as super, is a retirement fund for all working Australians. In short, throughout your working life, your employers will contribute a percentage of your salary to your super account. A superannuation fund will then invest this money on your behalf. Ultimately, the goal of superannuation is to ensure that you have enough money to live on once you retire.
In Australia, the current superannuation guarantee sits at 9.5%. In other words, employers must pay 9.5% of your income into your super fund each pay cycle. This does not come out of your take-home pay. Instead, it’s paid on top of what you earn.
Finally, as superannuation is for your retirement, it’s not something that you can access on a whim. Instead, you may need to wait until you’re 65 or reach your preservation age and retire. However, we’ll touch on that more as we go.
So, while that covers the basics, there’s much more to consider when you start learning about superannuation. Read on as Monzi digs deep into the information that you need to know. Let’s get started.
What is a superannuation fund?
When you receive a super payment, it is paid to the superannuation fund that you have an account with. In short, a superannuation fund pools the resources of many people and invests in a range of assets, shares and securities to produce a return and grow your money over time.
With this, super funds usually offer you options. In other words, depending on your risk appetite and investment preferences, your fund may allow you to select a profile that suits you. For instance, if you are young, then you may be willing to take on more risk. However, if you are nearing retirement, then you may prefer something more conservative.
In Australia, there are many different super funds. As a result, when you enter the workforce, you must find one that offers what you need. Do your research and compare your options to determine which super fund might be right for you.
What’s the point of superannuation?
It doesn’t matter whether you’re just starting your working life or you’ve been at it for decades, superannuation is extremely important. In short, its purpose is to allow you to accumulate wealth over time so that you can help pay for your life once you retire.
With concessional tax treatment and superannuation guarantees, the Australian government has designed a straightforward and advantageous system that you can use to set yourself up for life after work. As a result, you must do what you can to maximise your super. That way, once you turn 65, you may live comfortably and enjoy the downtime that retirement provides.
How do I add money to my super?
If you are employed and earning an income that exceeds the minimum threshold, then there’s no need for you to add money to your super. Instead, your employer will take care of that for you and will make the mandated 9.5% superannuation guaranteed payment into your account. All you need to do is supply your super account details when you begin working with the organisation.
Beyond this, you may have the option to make additional contributions out of your before-tax or after-tax income. As a result, if you can afford it, then this could be one handy option to help boost your retirement savings.
How much super should I be paid?
If you are over 18 and earn more than $450 per month, then you are entitled to super payments. Moreover, if you are under 18, but earn more than $450 and work more than 30 hours a week, then you will be paid super.
In Australia, the current superannuation guarantee is 9.5% of your ordinary time earnings. With this, your employer must pay 9.5% of what you earn for the hours you work into your super account, on top of the wage that they pay you.
To put this into an example, let’s say you earn $1,000. With this, your employer must pay $95 into your super account. However, just keep in mind that super payments are usually processed quarterly.
Finally, while the current superannuation guarantee sits at 9.5%, this will rise to 12% by the start of the 2025-26 financial year.
Can I make voluntary contributions?
Yes. As we’ve touched on, you can voluntarily contribute to your super fund. In short, while this is not mandatory, if you can afford it and have a little extra cash lying around, then additional contributions can be a great way to help boost your super balance. After all, over time, this investment will grow, meaning you could have a nice little retirement nest egg by the time you reach 65.
Your first option to make voluntary contributions is before tax. In short, your employer will pay a portion of your income into your super, rather than directly to you. Alternatively, you can make contributions with your after-tax income and claim a tax deduction when you file your tax return.
Finally, before you make voluntary contributions, consider your investment options. Once you pay money into your super account, you may not be able to access it again until you retire. As a result, you could potentially investigate buying shares or investing in property instead. That said, the lower tax rate of super contributions may be a significant incentive.
When can I access my super?
You can access your superannuation when you turn 65, regardless of whether you have retired or not.
In addition to this, you can also access your super if you have reached your preservation age and retired. In short, your preservation age is simply the age at which you can access your super as a retiree. As a guide, your preservation age should be around 60 years old. However, contact your super fund to determine your exact preservation age.
Finally, you may be able to access your super early, before you reach your preservation age under certain exceptional circumstances (e.g. severe financial hardship or terminal illness).
My employer isn’t making the required super payments: help
If you believe that your employer is not meeting their super obligations, then it’s important to follow up with them. Your superannuation is for your retirement, so while a few missed payments might not seem like a big deal, it will add up over time. In addition to this, super payments are a legal requirement, meaning if your employer is not making these payments, then there may be consequences.
In these situations, the first step is to approach your employer. Ask how often your super is being paid, how much is being paid and where it is paid to. Next, check this against your annual super statement.
If you are not satisfied with their answers or can prove that they are not complying with the superannuation guarantee, then you will need to contact the Australian Taxation Office. With this, you can call them on 13 10 20. Alternatively, you may be able to submit a complaint online.
Ultimately, as an employee, you’re entitled to superannuation. If your employer fails to make payments, then you must take steps to rectify this situation.
What is my superannuation member number?
When you open an account with a super fund, you will receive a superannuation member number. In short, this will simply be a unique code allocated to you for identification purposes.
With this, your member number will be listed on all letters you receive from your super fund. In addition to this, if you log into your account, then you should be able to find it relatively easily.
When you start a new job, you may need to provide your employer with your member number and super fund. That way, they can pay you the super that you’re entitled to.
What is a unique superannuation identifier?
A unique superannuation identifier (USI) is a number given to a super fund for identification purposes. In essence, it’s similar to an Australian Business Number (ABN) or Tax File Number (TFN). However, rather than being for a business or individual, it’s for a super fund.
Typically, must provide your fund’s USI when you change jobs but stick with the same fund. In addition to this, it may also be necessary when you’re looking to transfer your superannuation balance between different funds.
To find your fund’s USI, check out their website or find the annual statement they sent you. Alternatively, the Australian Taxation Office’s USI lookup tool can make it easy.
What are reportable superannuation contributions?
Reportable superannuation contributions refer to additional contributions to your super account, beyond the compulsory super payments made by your employer.
As a guide, this usually refers to optional, before-tax contributions made where a portion of your income is paid into your super fund rather than directly to you. This may include any salary sacrificing arrangements that are in place. It may also include after-tax contributions too.
Reportable superannuation contributions may have tax implications or may change your eligibility for certain government benefits. As a result, contact a qualified tax professional for further advice.
Can I use my super for a home loan deposit?
Over time, your super fund can grow considerably. As a result, you may be wondering if you can use your super to cover the costs of a home loan deposit. After all, lenders require deposits of up to 20% on most mortgage loans. On a home loan of $500,000, you may need to pay $100,000 upfront.
Unfortunately, though, you cannot use your super to pay for your home loan deposit. In short, superannuation is intended to help you retire comfortably. As a result, unless there are exceptional circumstances, you cannot withdraw money from your account until you retire or reach your preservation age.
That said, there may be one option that you could investigate if you want to use some of your super to make your homeownership dreams come true. See below as we explain the First Home Super Saver scheme.
First Home Super Saver
While you cannot withdraw funds from your super account to pay for a home deposit, the First Home Super Saver (FHSS) may make this possible, at least to an extent.
In short, the FHSS allows eligible first home buyers to make additional super contributions to help reduce the time it takes to save a deposit. This is possible because super is taxed at a concessional rate that is lower than your standard income tax. Therefore, you’re able to keep more of your money which can then be put towards buying a home.
Through the FHSS, first home buyers can access up to $15,000 of voluntary contributions from any single financial year and can access up to $30,000 in total. This money must then be used to purchase a home within 12 months. Otherwise, you may need to return it.
In any case, the FHSS may be one superannuation tool that you can use to help you achieve your dreams of owning a home. Do your research to determine if it’s an option for you.
Can I access my super early?
Yes. However, excluding the FHSS, this will typically only be possible under exceptional circumstances. As a guide, examples of this include:
- Severe financial hardship
- Terminal illness
- Temporary or permanent incapacitation
- Compassionate reasons (e.g. medical treatment or care)
In these situations, you must contact your super fund to discuss your options. If you are eligible, then you may be able to access your super early. However, consider whether this is the right choice before doing so.
Finally, note that if your super balance is less than $200, you may apply to withdraw this amount as cash. This may occur if you find a lost super account or your employment is terminated.
Are there any ways to boost my super?
We all want to retire comfortably and enjoy our later years. However, to do this, you may need to maximise your superannuation when you’re young. That way, you can see significant growth over time.
The first way to boost your super could be through salary sacrifice contributions. In short, this will be voluntary and involves having your employer pay more of your before-tax income into your super account. While this means that you won’t receive as much when your income is deposited, super contributions are only taxed at 15%, meaning it could be a tax-effective way to boost your super.
In addition to this, you can make voluntary contributions using your after-tax income. With this, you may be able to claim a tax deduction on these contributions when you complete your tax return. Ultimately, the net benefit should be similar to a salary sacrifice arrangement.
Given this, there are options if you’re looking to boost your super. Consider what’s right for you at the present time and in the future. Moreover, do your research to determine if there are more strategies that you can employ. If you successfully boost your super, then your retirement could be a long and happy one.
What types of superannuation funds are there?
Super funds come in different forms. As a result, you will need to consider what you are looking for in a fund to determine which type is right for you. To give you an idea, the types of funds include:
- Retail super funds: these funds are open for anyone to join. They may offer a wide range of investment opportunities but will charge fees.
- Industry super funds: some industry funds may limit who can apply (e.g. those working in certain industries). They may not offer as many investment opportunities as retail funds.
- Corporate super funds: a fund established by an employer exclusively for their employees. Corporate funds will usually only be offered by large organisations.
- Public sector super funds: government employees may access public sector funds. Public sector funds may not offer a wide variety of investment opportunities.
- Self-managed super funds: private funds that you must manage yourself. As a guide, a self-managed fund may have up to four members. The key benefit is that you have control over investment decisions.
How do I choose the right superannuation fund?
Not all super funds are the same. As a result, there are a handful of key factors that you must compare to determine which fund is right for you. This includes:
- Past performance: compare funds based on their returns over the past one, three, five or ten years. However, remember that past performance does not necessarily reflect future performance.
- Fees and charges: all funds charge fees. It’s up to you to find the fewest or lowest fees whenever possible.
- Insurance: income protection insurance, life insurance and disability insurance policies may be offered through your super fund.
- What can you invest in: you may be able to select an investment portfolio that matches your needs and preferences (e.g. growth vs conservative).
- Are there any other features: some funds may offer discounts or deals on other products or may provide financial advice.
While you can compare super funds via your own research, one easy option could be to explore one of the many comparison websites on the market. In short, these websites may allow you to compare features and terms side-by-side with minimal hassle. That way, it can make your decision much easier.
Finally, if you would like to learn more, Moneysmart has provided an insightful guide to choosing a super fund. There you may find all the information that you need to know.
What information do I need to provide when I sign-up?
Once you find a suitable superannuation fund, signing up should be relatively straightforward. In most cases, you can do it online. However, you must provide a few key details. As a guide, this may include:
- Personal details (e.g. name, date of birth)
- Verification documents (e.g. driver’s licence)
- Tax file number
Follow the instructions and agree to the terms and conditions. Assuming your application is approved and your identity is verified, your new super account could be established before you know it.
Note that you may sign-up without a tax file number. However, it may impact the rate of tax that you are charged. As a result, it’s usually a good idea to ensure that you have a tax file number and can provide this when you open your account.
How can I check my super payments?
If you want to keep a watchful eye on your retirement savings, there are a number of ways that you can do this. Moreover, monitoring your payments is often a good idea to ensure that your employer is making their required contributions.
In any case, the first way to check your super payments is to look at your payslip. With this, your employer’s super contribution amount should be listed. Obviously, though, this money isn’t transferred to you. Instead, it goes straight to your super fund.
Next, you can access your super statements through your superannuation fund. In short, this annual statement will be issued by your fund at the end of the financial year. As a guide, it should list your balance, contributions, fees and any insurance cover you have.
Finally, the Australian Taxation Office records details of your super including any accounts you have and the balances. You may access this information via MyGov through the ATO portal.
I’m changing jobs: what do I need to do?
If you change employers, then you have two options regarding your super. Firstly, you could carry over your current super fund. However, your other option could be to set-up a new account with a different fund.
While the decision is yours, it’s usually best to try and keep your super together in one place. That way, it’s less likely that you will lose track of it. The simplest way to do this will be to always use the same account. However, if you do open a new account, then you can apply to transfer your funds across.
Finally, when you begin your job, your employer will ask for your superannuation account details. With this, ensure you know which super fund you are with as well as your member number. That way, there should be no issues when you receive your paycheck.
Can Monzi help me find the best super fund?
If you’re looking for the best super fund, then you must do your own research. At Monzi, we are not affiliated with any funds and are unable to provide advice tailored to your situation. Instead, we’ve done our best to outline what superannuation is and how you could maximise your earnings. Now, it’s up to you to go out and apply what you’ve learnt.
In any case, while we’re not a super fund, Monzi could still be able to help you. If you need a fast cash loan from $300 to $10,000, then our lender-finder service could be for you. Apply today and we could match you with a lender in just 60 minutes. Cut out the time and effort of finding a lender yourself. Monzi could do it for you.
Scroll up to Monzi’s loan slider or hit “Apply Now.” We could put you in touch with a great Aussie lender today.
Quick and easy personal loans for you
As we mentioned, Monzi works with lenders offering quick cash loans from $300 to $10,000. With this, these loans will take the standard principal and interest form. In other words, you can borrow money today and then your costs will be divided into a series of even repayments over a fixed term. Moreover, lenders charge interest and fees, meaning you will repay more than you initially borrowed.
Depending on the amount that you borrow, you could select a repayment term ranging from 12 to 24 months. As a result, it may be possible for you to divide your costs over a manageable period, rather than stretching your budget thin trying to pay upfront.
Ultimately, quick loans online could be one option to help you work yourself out of a financial bind. If your car needs major repairs or you have to complete some emergency travel, cash loans may allow you to access the funds you need.
Can I secure a loan against my super?
Through Monzi’s lender-finder, you may apply for either secured or unsecured personal loans. As a guide, loans under $2,000 will be unsecured, whereas loans greater than $2,000 must be secured with one of your assets. Unfortunately, you cannot use your super as security on a loan.
This is because super is a protected, non-divisible asset. In short, this means that if you default on a loan or debt, lenders cannot access it to recover their losses. As a result, using your super as security would be pointless.
Given this, if you are looking to apply for a secured loan of more than $2,000, ensure that you own an asset that can be used. As a guide, common assets that borrowers use as security include cars, boats and caravans. However, before applying, consider any consequences, costs and risk to determine if a secured loan is right for you.
How do I apply?
Need cash now? Get started with Monzi. We could save you the hassle and match you with a great lender in just 60 minutes. All you need to do is follow these steps to start your journey with Monzi:
- Select your ideal loan (e.g. amount and repayment term) using Monzi’s loan slider.
- Provide the necessary personal and financial details to complete Monzi’s online application.
- Get on with your day. At this point, we take over and will do our best to match you with an available lender who may consider your application.
- Keep a watchful eye on your texts and emails because we will contact you with an outcome. If successful, your lender-match will contact you to begin the next steps.
Simple, right? Just keep in mind that we cannot guarantee if all applications will be approved. Moreover, while we endeavour to provide you with fast outcomes on your loan application, you should aim to apply during business hours and supply all the necessary details. That way, your application may go off without a hitch.
What is superannuation: the end
That brings an end to Monzi’s superannuation guide for beginners. Learn something? That’s great! At the end of the day, our aim was to provide you with an in-depth, yet accessible guide explaining what you need to know to help you maximise your superannuation. If done well, you could develop a nice little nest egg so that you’re comfortable when you’re ready to retire.
Looking for something else? Why not give our lender-finder service a try. If you need cash loans from $300 to $10,000, just complete on an easy application. From there, we could match you with a lender before you know it. We’d love to hear from you.
If you have any questions, don’t be afraid to reach out. Contact us at firstname.lastname@example.org at any time. However, remember that we can only answer questions regarding our organisation and service.