Super basics: understanding how super works

7 October 2025

We aim to make superannuation easier to understand, to cut through all the jargon so that you can make informed decisions about your future.

In this article, we go back to the basics, explaining what super is and how it can help you achieve a comfortable lifestyle when you finish working.

What is superannuation?

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 – more on tax and super further below.

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.

How your super grows

Your super is a long-term savings plan. Three things go into your super to keep it growing:

• Contributions made by your employer.
• Any additional contributions you may be able to make.
• Investment returns and compound growth.

We'll take a closer look at each of these next…

Employer contributions

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.

The Superannuation Guarantee rate is equivalent to 12% of your salary (2025/26).

Your employer may also pay additional employer contributions as part of your salary package or as part of an industrial agreement or legislative requirement.

Additional contributions

Depending on your current situation and future goals, it may be worth considering additional ways to put money into your super.

You can make super contributions either before or after tax. The type of contribution that’s best for you will depend on your income and personal situation.

Here are some of the ways you can grow your super:

• Salary sacrifice – an arrangement with your employer to contribute part of your before-tax pay directly into super.
• Personal contributions – using money from your after-tax income, and because tax has already been paid, these contributions are not taxed when they go into super.
• Spouse contributions – if you’re married or in a de-facto relationship, you can add to your partner’s super, helping each other grow retirement savings.
• Downsizer contributions – if you’re eligible and aged 55 or over, you can contribute part of the proceeds from selling your home to super.
• Government support – programs like the super co-contribution and the low-income super tax offset can help eligible people boost their super.

Find out more about the different ways to grow your super, including conditions and eligibility.

Investment returns and compound growth

The money in your super generates investment returns, which may rise and fall over time. When returns are positive, they’re added to your balance and automatically re-invested. Those re-invested returns can then earn further returns, and this process keeps repeating while you remain invested.

The accumulating effect of earning returns on your previous returns is called compound growth. It’s a repeated cycle that, despite short-term ups and downs, is a powerful driver of long-term growth and can help your super grow faster as your balance increases.

Your investment choices

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 important factors to consider are:

• Your age now, and when you plan to retire.
• How much money you think you will need to achieve a comfortable retirement.
• The level of investment risk that you are comfortable with at this stage in your life.

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.

You can learn more about our investment options in the Investment and Fees Guide for your account type, which you can find on our PDS and guides page.

Tax and super

Super is a tax-effective way of saving and growing your money for the future. Employer contributions and salary sacrifice contributions are taxed at 15%, which for most people is lower than their income tax rate.

Because of the tax benefits in super, even small extra contributions can go further and make a big difference to your retirement savings over time.

There are exceptions, such as people earning more than $250,000 a year who pay an extra 15% tax on concessional contributions, and people earning less than $37,000 may be eligible for the low-income super tax offset. Further information is available here:

• Superannuation tax
• Super support for low and middle income earners

Another advantage of super is that earnings on investments are taxed at a lower rate than they tend to be outside super, making it one of the most effective ways to grow your retirement savings. Earnings on investments within super are taxed at 15%, although the effective rate may be lower in some cases due to tax deductions, credits and offsets.

Fees and costs

It's important to note that super funds charge fees and costs to manage your super.

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.

Helping you with advice and guidance

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.

👉 Book your Super health Check appointment