Australian superannuation

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 an employee retires.

At the present time, the laws propel the employer to contribute 9% of an employee's wages automatically into a pension fund. If working in Australia on a temporary resident visa, your superannuation money may be available to you upon departure from the country.

What are the employer’s requirements?

Contributions to superannuation funds are made every three months, by 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.

What does this mean to the employee?

Almost every employee is covered under the superannuation system. Originally, employers were made to contribute 3%, but this has grown to a compulsory 9% of an employee's earnings, though 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 those with pay totalling less than $450 per month. Superannuation payments continue during times in which the employee is on paid leave, but not in the cases of unpaid leave of absences from work.

Since July 2005 some employees have had the option of choosing which fund they would like their payments made into, whether a complying super fund or a retirement savings account. Funds with no hidden fees, no entry or exit fees, and low to minimal account keeping fees are vital to getting the most out of a superannuation fund.

At retirement age (55), an employee has access to all of the funds belonging to him or her. Taxes, pension handling and management fees are deducted from these accounts at this time. 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, creating a very important nest egg.