Understanding your super – what you need to know
With global uncertainty mounting about the impacts of the COVID-19 pandemic, being in control of your finances has never been more important.
No matter your financial circumstances, it helps to have an understanding of the basics of superannuation.
Increasing your knowledge about super now may help ensure your future wealth and protect your retirement plans.
What is super?
Superannuation, or super, is a compulsory scheme where a person has money paid by their employer to a super fund so they are financially supported when they retire from the workforce.
Under certain circumstances, such as those brought on by the coronavirus outbreak, that may allow you early access to your super.
Superannuation in Australia
As an Australian, your retirement income is likely to be made up of a combination of your personal savings, the Age Pension from the Australian Government, and your super.
Superannuation in Queensland started with an Act of Parliament in 1912 that gave a retirement pension to public servants. However it didn’t become compulsory for all employers to pay superannuation for their employees until 1992 when the Superannuation Guarantee was introduced.
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How do employer super contributions work?
While you’re working, your employer is legally required to put a minimum of 9.5 per cent of your regular wage or salary into your super fund. This is known as the Superannuation Guarantee and is an extra payment on top of your regular wages or salary.
Most people are able to choose which super fund they want their employer to contribute to and retain that fund, if they so desire, when they change jobs. Over the course of your working life, these funds should grow with regular contributions. Your super fund will also invest your money, with a view to giving you investment returns on your super.
How can I grow my super?
If you feel like the 9.5 per cent employer contributions are not enough, you can add more money to your super fund in a variety of ways. These can include: salary sacrificing some of your pre-tax salary; making voluntary after-tax super contributions; and contributing to your spouse’s super account to support them while they support you.
Another way to make sure you’re maximising your super is to consider consolidating it into pone fund. This can help you keep track of how you’re progressing towards retirement, and importantly help you save on fees across multiple funds.1
How do I access my super?
Generally, taking money out of your super fund isn’t possible until you reach your preservation age (see table below),2 and permanently retire. However, you can access your super without restrictions if you are aged 65 or over, even if you are still working.
| Date of birth | Age you can access your super |
| Before 1 July 1960 | 55 |
| 1 July 1960 – 30 June 1961 | 56 |
| 1 July 1961 – 30 June 1962 | 57 |
| 1 July 1962 – 30 June 1963 | 58 |
| 1 July 1963 – 30 June 1964 | 59 |
| From 1 July 1964 | 60 |
If you’re between your preservation age and 64, and still want to work, you can use some of your super while you’re working via a Transition to Retirement Income account. This can help you reduce your work hours without reducing your income.
Stay informed, daily
If you’re between your preservation age and 64 and decide to go back to work after retiring, you can access the super you’ve accumulated so far. However, you will need to wait until your employment ends or you’re 65 before accessing any new contributions.
There are cases where you can access your super early, such as:
- Permanent or temporary incapacity
- Severe financial hardship
- Terminal medical condition
- Compassionate grounds.
Recently, the Australian Government announced that individuals affected by the coronavirus may be able to access up to $10,000 of their superannuation in 2019-2020 and up to a further $10,000 in 2020-2021 (conditions apply).
This new early release measure aims to specifically help households that are financially affected by the coronavirus situation.
How do I choose a super fund in Australia?
Once you have an understanding of the basics of super and how it can work for you, the next step is figuring out which super fund is right for your needs.
Fees, investment options, performance over the long term and potential insurance cover may be some of the factors to consider in making your choice.
Why QSuper
QSuper is a profit-for-members fund, which means members’ interests always come first. The fund is an industry leader in 10-year performance. Its Balanced investment option for its Accumulation account has produced strong returns with fewer ups and downs over the past 10 years.3 These results have been driven by a unique investment approach that aims to provide market-leading growth with less risk.
QSuper also believes in keeping fees low with its fees being among the lowest in the country4.
[Footnotes]
1. Before you consolidate your super, you should check with your other super funds if there are any fees or tax implications, or loss of insurance or other benefits.
2. www.ato.gov.au/super/self-managed-super-funds/paying-benefits/preservation-of-super, accessed 14 January 2020
3. Past performance may not be a reliable indicator of future performance. QSuper’s Accumulation account, Balanced Option only, ranked fourth. The Chant West data is based on information provided by third parties that is believed to be accurate at 30 June 2019. Returns reflected after investment fees and tax. Chant West’s Financial Services Guide is available at chantwest.com.au
4. Chant West Super Fund Fee Survey, March 2019. The Chant West data is based on information provided by third parties that is believed to be accurate. Chant West does not issue, sell, guarantee, or underwrite this product. The findings are based on account balances of $25,000 and $50,000. Only administration and investment fees and costs are covered. Fees are gross of income tax. Go to chantwest.com.au for further information about the methodology used and Chant West’s Financial Services Guide. For the QSuper investment options: Lifetime option Focus 1, Aggressive, Growth, and Moderate.
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