Superannuation became mandatory in Australia in 1992 under the ruling of the Keating Labor party. Superannuation itself is a type of pension plan for employees that can be accessed when the employee retires. At the present time, the laws propel the employer to contribute 9% of the employee's wages automatically into a pension fund.
What are the employer’s requirements?
The superannuation funds are contributed to every three months, by the employers on behalf of their employees. These funds, along with the contributions from the employee, are then invested on the employees' behalf in the form of stocks and other securities. These funds collect dividends and interests that allow the funds to grow steadily.
So what does all this mean to the employee?
Almost every employee is covered under the superannuation system. The original amount the employers were made to contribute was 3%, but this has grown to a compulsory 9%; although these monies are not payable on any overtime the employee has worked. Employees not eligible for the superannuation fund include employees under the age of 18, those working less than 30 hours a week and with pays under $450 per month.
Superannuation payments even continue during times in which the employee is on paid leave, but not in the cases of unpaid leave of absences from work.
As of July 2005, employees may be given the choice of what fund to pay into. There are a few things to look for when seeking a fund. Those with no hidden fees, no entry or exit fees, and low to minimal account keeping fees are vital to getting the most out of ones super fund.
At retirement age, the employee has access to all of the funds belonging to them. Taxes, pension handling and management fees are deducted from these accounts as well. There is great support at present for the superannuation funds and many Australians have become quite knowledgeable about money investments as a result of their participation in this programme.
Superannuation funds are a key part of an employee’s plans for retirement. By choosing the right one, when a choice is given, and maintaining a form of employment that meets the criteria for the fund, one can be that much more prepared for retirement. Simple research into the types of funds available and a search for those with minimal fees can save an employee thousands of dollars worth of potential income, perfect for retiring with.