How Super Works
Super is shorthand for superannuation which is a means of saving for your retirement. Super money comes from your employer who is required by law to contribute 9.5% of your salary to a super fund. The percentage is expected to increase to 12% in the near future.
With your employer, yourself, and occasionally the government contributing over the course of your working life the amount in your super will build so that ideally, you will have the necessary funds to live off of when you retire.
To choose your super fund yourself you can inform your employer by way of a Standard choice form from the Australian Taxation Office or from your employer. Your employer can decide which fund to pay into in other cases which would go into a default super fund which is nominated under an industrial award or by your employer.
Extra contributions to your super can be made by:
- Depositing some of your savings into your super account
- Asking your employer to contribute from your pay before taxes are taken out
- Regularly transferring super from another fund
Once you reach your preservation age, between 55 and 60 years of age, your super can be withdrawn. You can receive your super funds in a lump sum, over time in monthly disbursements, or a combination.
It should be pointed out that the monthly disbursement plan allows for funds that remain in your account to continue to earn interest.