🇦🇺 Australian explainer
Understanding Superannuation
How super works, what the 12% guarantee means for your pay, why fees matter more than you think, and how to make the most of it.
🏦 Explainer·8 min read·Updated March 2026
The Super Guarantee — what your employer pays
Employers must contribute 12% of your ordinary time earnings to your super fund (since July 2025; the rate is 12% and unchanged for 2026). This is called the Super Guarantee (SG).
Example: $80,000 salary
$80,000 × 12% = $9,600 in employer super contributions per year. This is on top of your salary — it doesn't come out of your take-home pay.
The SG rate has been climbing for years. It reached 12% in July 2025 and remains unchanged unless legislation changes. Most employment contracts quote salary "plus super" — always check whether a quoted package includes super or adds it on top.
Why fees matter enormously
Super fees seem small — often 0.5–1.5% per year — but compound over decades into a significant amount.
| Annual fee | Balance at retirement (30 yrs, $100k start, 8% return) |
|---|---|
| 0.3% (low-cost industry fund) | ~$970,000 |
| 0.8% (average) | ~$860,000 |
| 1.5% (high fee retail fund) | ~$730,000 |
A 1.2% fee difference costs ~$240,000 over 30 years. Compare funds using ATO's YourSuper tool.
Contribution types and tax
Employer (SG)
15% tax on entry
$30,000/yr combined concessional cap
Compulsory 12% of OTE. Counted toward your concessional cap.
Salary sacrifice
15% tax on entry (vs marginal rate)
Within $30,000 concessional cap
Pre-tax contributions. Reduces taxable income — effective tax saving for anyone in 32.5%+ bracket.
Personal deductible
15% tax on entry
Within $30,000 concessional cap
Lodge a Notice of Intent form. Claim a deduction on your tax return. Good for self-employed.
Non-concessional
No additional tax (after-tax money)
$120,000/yr or $360,000 over 3 yrs
Boosting your balance without a tax benefit on entry. Useful when you have spare post-tax cash.
Frequently asked questions
Can I choose my own super fund?
Yes. Most employees can choose their own super fund. If you don't choose, your employer's default fund is used. You can compare funds at ATO's YourSuper comparison tool (ato.gov.au/YourSuper). Key things to compare: investment performance over 5–10 years, total fees (admin + investment), insurance offerings, and the types of investment options available.
What's the difference between concessional and non-concessional contributions?
Concessional contributions (before-tax) are taxed at 15% going in — this includes employer SG contributions and salary sacrifice. The annual cap is $30,000 (2025–26). Non-concessional contributions (after-tax) have no tax on entry since you've already paid income tax. The annual cap is $120,000, or $360,000 using the bring-forward rule across 3 years.
When can I access my super?
You can access super when you reach your preservation age (60 for anyone born after 30 June 1964) AND retire, or turn 65 regardless of retirement. Some limited early access is available in genuine cases of severe financial hardship, compassionate grounds, terminal illness, or permanent incapacity. The temporary COVID-19 early access scheme has permanently ended.
What happens to my super if I change jobs?
Your super stays in your fund — it doesn't go with your employer. Your new employer contributes to whichever fund you nominate (or their default if you don't choose). If you've built up multiple super accounts over your career, consolidating them into one fund saves duplicate fees. Check for lost super via myGov.
Is my super protected if the fund collapses?
Super funds are regulated by APRA and must hold assets separately from the fund's own assets. If a fund is wound up, assets are transferred to another fund rather than lost. The government's Superannuation Protection Framework provides an additional safety net. Industry and retail super funds have robust protection; SMSFs carry more personal responsibility.