What are super contributions or superannuations?

As a working individual, one of the most important things you need to do is build and plan your future securely. Super contributions or Superannuation is a government initiative that helps you do just that. Any individual working as an employee is entitled to superannuation by his employer, provided that he passes a few criteria. In simple words, it is a retirement or pension plan that your employer sets up for you.

This plan is set up by your employer in the form of a super fund and a portion of your wages go into this. These super funds protect your money by investing in various properties, shares, among others.

Generally, you will not be able to withdraw to utilize this money until you retire. However, the government makes a few exceptions to this case where you can utilize your super money.

You can also top up the fund by making your own contributions to it. Additionally, the government also helps low-income earners by contributing to their super funds.

How to choose a super-fund?

In most cases, the employees have an option to choose their super fund. This can be done by filling out a standard choice form from the Australian Taxation Office (ATO) or from your employer within 28 days of starting work. If your employer does not give you an option to select your super fund, it will be saved in a default super account.

There are many super funds that you can choose that give you varying returns and benefits. Taking some time out to compare and identify the right option for you in the long term can help your money be well-protected and safe.

Super funds also offer default insurance for you, which is relatively cheaper compared to the alternatives. However, you have a choice to cancel it if you do not wish to avail the insurance coverage schemes.

Once your super fund is set up, you can create a myGov account in order to track and manage your super accounts. You can merge and combine multiple accounts, keep track of payments and also check details when you have set up the myGov account.

How do the super accounts get funded?

Firstly, you are eligible for being paid super if

  • You are 18 years (or older) and are paid $450 (or more) in a calendar month before tax. OR,
  • You are 18 years (or younger) and are paid $450 (or more) in a calendar month and you work 30 hours (or more) in a week.

As of 1st July 2014, your employer is needed to pay 9.5% of your ordinary time earnings into your super fund. However, this margin is set to be increased in the coming years. In some circumstances, the government helps you by contributing to your super fund. Additionally, you can also personally contribute to these funds.

If your employer has not set up a super fund for you, you can take this up with them. If not, contact ATO to get a resolution for your queries.

References:

https://www.ato.gov.au/Individuals/Super/

https://www.moneysmart.gov.au/superannuation-and-retirement/how-super-works