What is superannuation?


Superannuation is an investment environment designed specifically to help you save for retirement. That makes super your money to prepare for your best financial future.

Super grows through your working life

Knowing what superannuation is and how it works can give you greater control and the confidence to make the financial choices that are right for your needs.

Your super is a very long term investment, specifically designed to help you save for retirement. During your working life, your employer will make regular contributions to your super account as required by the Superannuation Guarantee legislation. These contributions are currently worth 10.5% of your ‘Ordinary Time Earnings’ and are commonly known as Superannuation Guarantee (or SG) contributions.

You can also add extra money to your super; this is commonly referred to as ‘contributing’ or ‘making super contributions’.  

Your employer’s contributions and any contributions of your own are added to your super fund, and invested across a variety of different assets. These investments can comprise anything from cash and fixed interest, with the annual returns helping to grow your super balance. 

Generally you can access your super at age 65 or when you retire after reaching your preservation age (between 55 and 60 depending on your date of birth). You may be able to access your super earlier in limited circumstances such as if you become permanently disabled or suffer severe financial hardship.    

Most Australians choose to have their super professionally managed, so while you are progressing through different life stages, your super keeps working away in the background with the benefit of professional investment expertise. When you are ready to retire, your super provides a valuable source of money to live on.

Super is lightly taxed

One of the advantages of superannuation as an investment environment is that it is lightly taxed. This can mean more of your money goes towards your retirement than if you were to invest outside of super.

As a guide, before-tax, or ‘concessional’, contributions are taxed at just 15% if you earn under $250,000 per financial year and contributions made using after-tax money, known as non-concessional contributions, don’t attract any tax at all. The investment returns your super earns are also taxed at 15%. If you earn more than $250,000 per financial year, contributions to your super are taxed at 30%.

A valuable source of cash in retirement

We can’t normally access our super during our working life, but that’s not such a bad thing. It means your super will be there for you when you need it most – in retirement.

As you near retirement you may want to wind down your working days and your super can be used to provide additional funds to live on or supplement your income through a ‘transition to retirement’ pension.

Then, when you are ready to fully retire, you can choose to take your super as a lump sum, or as an income stream called an account based pension. This lets you enjoy a regular income in much the same way as your working days and, because you keep your money within the super system, it continues to be invested and benefit from ongoing tax concessions.

It’s your money

It's worth taking an active interest in your super savings during your working years. It's your money and your super's investment performance over time will impact how much you eventually have in retirement.

Next: What is MySuper?

Related content

MySuper offers members a simple, cost-effective super solution that allows easy comparison of MySuper funds. We adjust our BT MySuper investment options for you over time.
Take control of your super today to potentially enjoy a more financially rewarding retirement. By the time you retire, your super could be one of your most valuable assets.
BT offers three types of insurance cover through super: Death, Total and Permanent Disability, and Salary Continuance Insurance. Learn more about your insurance in your super options.
Super could be the biggest asset you have in retirement. But do you understand how it works? Our video will help you learn more about how your super works for you.

Things you should know

Information is current as at 1 July 2022.

This information has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation, and needs. 

Superannuation is a long-term investment. Generally, contributions to a superannuation fund are preserved. The government has placed restrictions on when you can access your preserved benefits. In general, benefits will not be able to be paid until a member is age 65, or has permanently retired and is above his/ her preservation age (i.e. 55 years up to 60 years depending on when the member was born). 

The Government has set caps on the amount of money you can add to superannuation each year on a concessionally taxed basis. Contributions that exceed your contributions caps may have additional tax applied to them. The contributions caps change from time to time. Up to date information is available on the ATO website at ato.gov.au

Before requesting a rollover, you should consider where your future employer contributions will be paid (if your employer contributions are currently being paid to another fund) and check with your other fund(s) to determine whether there are any exit or withdrawal fees for moving your benefit, or other loss of benefits (e.g. insurance cover), noting that you may not receive the same type or level of benefits after the rollover. You may not be covered for injuries or illnesses that have arisen since you took out previous insurance, and you may lose loyalty benefits.