Superannuation in Australia – How it Works

Superannuation is money that is set aside for you while you work by your employer, so you have savings for when you retire – that you can’t touch until then. In Australia, superannuation is mandatory, and an amount contributed by your employer (usually the equivalent of 9.5% of your wage) is put into a superannuation fund that you choose.

This compulsory superannuation contribution does not come out of your pay – it is on top of your earnings from your employer and is paid automatically into a super fund, whether you work full time, part time or casually. You cannot “opt out” of superannuation in Australia – unlike KiwiSaver, if you don’t choose a superannuation fund when you start your first job in Australia, your employer will open one on your behalf with their “default” superannuation fund, and you can’t choose to receive your superannuation directly instead.

You can make additional voluntary contributions to your Australian superannuation fund while you work in Australia. This can help you have more money put aside for your retirement, either in Australia or in New Zealand, as small additional contributions now (for example, $20 per paycheque) can add up over time.

In Australia, once you reach retirement age (currently 65 years old, but may change), you can choose how you would like to receive your superannuation – as either a lump sum, a payment every month, or as a combination of both (for example, half as a lump sum and the rest distributed by monthly payments).  This can set you up for retirement in a sweet house, or just make sure you have money coming in each month for expenses.

If you die before you reach retirement age, your Australian superannuation will become part of your estate, and be distributed to your “beneficiary”, which is generally your wife or husband, or your children.

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