Updated 26 July 2023
We aim to make superannuation easier to understand, to cut through all the jargon so that you can make informed decisions about your future.
This article covers the basics, explaining what super is and how it can help you achieve a comfortable lifestyle when you finish working.
Superannuation is money that is put aside for your future retirement.
In Australia, superannuation (or 'super') is a compulsory system requiring an employer to contribute to an eligible employee's retirement savings.
For most people, if you are working, your employer puts part of your salary aside, and a super fund will invest it for you until you retire. You can also top up these savings, and there are tax benefits to help your money go further.
Your super will keep growing over time, giving you a source of income when you finish working. The more you can put into your super during your working life, the more comfortable your future lifestyle may be.
Your super is a long-term savings plan. Three things go into your super to keep it growing:
We'll take a closer look at each of these next…
If you work full time, part time, casually or, in some cases, as a contractor, your employer must pay money into your super account on at least a quarterly basis. This is known as the Superannuation Guarantee contribution.
This financial year (2023/24), the Superannuation Guarantee rate is equivalent to 11% of your salary. The Government will be gradually increasing the Superannuation Guarantee to 12% by 2025.
Your employer may also pay additional employer contributions as part of your salary package or as part of an industrial agreement or legislative requirement.
Depending on your current situation and future goals, it may be worth considering additional ways to put money into your super.
You can make these contributions either before or after tax, and the type of contributions is best for you will depend on your income and personal situation. Find out more about the different types of contributions.
The Government offers various incentives to put money into super. These include tax benefits for couples contributing into each other's super, and Government co-contributions (where the government pays money into your super if you make additional contributions) for people earning less than $58,445 (2023/24).
Your super generates investment returns. Some years this return is negative, so your balance decreases. However, in many years it will be positive, and these investment returns are automatically put back into your super, where they are re-invested. Any further returns are re-invested again, and this process keeps repeating until you retire.
The accumulating effect of earning returns on your previous returns is called compound growth. It's a repeated cycle of returns and re-investing that can help your super grow faster as your balance grows.
Your super fund will invest your money for you, with the aim of growing enough for you to retire comfortably.
You always have a choice of how you want your super invested. A range of investment options is available to cater for different financial situations and goals.
Investment options consist of one or more types of assets such as shares, bonds, cash, property and infrastructure. Each option has a different level of risk and potential returns, dependent on the assets that are being invested.
When choosing an investment option, three of the most important factors to consider are:
If your timeframe to retirement is long, generally you can afford to take more risk and potentially benefit from higher investment returns. If your timeframe is shorter, you may need to reduce your risk and potentially receive lower returns.
Further information about our investment options is available in the Investment Choice Guide for your account type.
It's important to note that super funds charge fees and costs to manage your super, and these are deducted from your account balance.
Each super fund has a different way of charging fees. The most common types of fees across all funds are for administration, investment, advice and insurance.
At Brighter Super we work hard to keep our fees as low as possible. Find out more about our fees and costs.
If you don't already have an adviser, our team of super specialists can help you discover the best way to grow your super.
We offer our members Super Health Check appointments over the phone or video call, at no additional cost. We look at the current health of your super, discuss different ways to grow it, and check that you are on track for a comfortable life after work.
LGIAsuper Trustee (ABN 94 085 088 484) (AFSL 230511) (the Trustee) as trustee for LGIAsuper (ABN 23 053 121 564) (RSE R1000160) (the Fund) trading as Brighter Super. Brighter Super products are issued by the Trustee on behalf of the Fund. Brighter Super may refer to the Trustee or LGIAsuper as the context may be. This article provides general information only and does not take into account your individual objectives, financial situation or needs. As such, you should consider whether it is appropriate in light of your own objectives, financial situation and needs prior to making any decision. You should consult a licensed financial advisor if you require advice which does take into account your personal financial circumstances. You should also obtain and consider the Product Disclosure Statement (PDS) before making any decision to acquire any products. A Target Market Determination (TMD) is a document that outlines the target market a product has been designed for. Find the PDSs and TMDs at brightersuper.com.au/governance.
This article contains information that is up to date at the time of publishing. Some of the information may change following its release. Any questions can be referred to Brighter Super by calling us on 1800 444 396 or by emailing us at firstname.lastname@example.org.