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Basics of Superannuation
There's a lot of talk about super these days, but what makes it so important?
Well firstly, after your home, your super is likely to be the next biggest investment you'll have. So it deserves your attention, it's your financial future that's at stake.
Secondly, it is unlikely that the Government Age pension will deliver the expected lifestyle in retirement that you had in mind. In Australia we have a safety net system, which means that in retirement as your assets rundown, social security steps in to fill the gap. You may qualify for a full or part pension and that's a start, but it’s likely you'll need more.
For most people, saving through super may be the best and safest option. Super is highly regulated, and there are tax advantages that can help your savings grow faster.
There's compulsory super for workers
If you're aged 18 to 69, employed and earn more than $450 in a calendar month then your employer is required to make contributions on your behalf to comply with the Superannuation Guarantee.
If you are under 18, you are eligible for compulsory super guarantee if you work 30 hours or more a week.
If you are entitled to super guarantee payments, your employer must pay a minimum of 9% of your earnings base into your super account.
Your earnings base may be stated in an award, an agreement or contract with your employer, an occupational super arrangement or a law of the Commonwealth, a State or a Territory.
If none of these applies to you, your earnings base will be based on ‘ordinary time earnings’. This is what you earn for your ordinary hours of work, which generally includes your ordinary pay, over-award payment, shift loading and commission.
From 1 July 2008 all employers were required to calculate the minimum contributions using what you earn for your ordinary hours of work.
Payments are due every quarter and the contribution rate is currently 9% of your earnings base. The deadline for payment of each quarter's SG contributions is the 28th of the following month, as shown below.
| Quarter |
Due date for SG contribution payment |
| 1 July to 30 September |
28 October |
| 1 October to 31 December |
28 January |
| 1 January to 31 March |
28 April |
| 1 April to 30 June |
28 July | Source: Australian Tax Office
In many cases you will be able to choose the fund to which those contributions are made. There's more information about choice of fund here.
What if my employer won’t pay?
If you are concerned that your employer is not paying your SG contributions on time or at all, you should follow the steps outlined below:
Step 1
Talk to your employer and ask them:
- how often they are currently paying your super;
- into which fund they are paying it, and
- how much they are paying.
Step 2
Check your last Member Statement from your super fund, or contact them to confirm if your employer has paid your super. You can simply go online to check your account via MemberAccess.
Step 3
If you have completed steps 1 & 2 and still believe your employer is not paying your SG contributions on time or at all, and/or is not paying the super to your chosen fund, you can lodge an enquiry with the Australian Tax Office about unpaid super. Simply go to their website or call 13 10 20. |
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