Guidance

A quick and easy super guide

A quick and easy super guide

Superannuation is key to your future, so it’s important to be active and engaged in looking after it.

So if you’re new to the workforce or just new to super, here are six steps towards understanding your super and staying on track.

Are you employed?

If you’re over 18 and earn more than $450 per month, your employer generally has to pay you super. If you’re under 18 and working 30 hours a week or more, you should also be paid super.

If you’re a contractor, you may be entitled to super if you’re being paid for your labour, even if you invoice using an Australian Business Number (ABN).

Choosing your super fund

When you start a new job, your employer should give you information about your super choices and let you know what their default super fund is. You may also be able to choose your own fund. If you’re unsure, speak to your employer.

To let your employer know which super fund they should make contributions to, simply complete a standard super choice form from the Australian Taxation Office (ATO) or use the one provided by your employer.

Contributions into your super

Once you start work, your employer needs to pay contributions into your super account, currently equal to 9.5% of your salary. This will increase to 10% by 1 July 2021, and then gradually increase to 12% by 1 July 2025, which means more super for you.

  • You can also make your own contributions from your after-tax salary, or you can ask your employer to make extra contributions from your before-tax salary.
  • A before-tax contribution is called a salary sacrifice contribution. It can be an effective way of adding to your super, because these contributions are taxed at a maximum of only 15%, instead of your marginal tax rate.
  • If you’re self-employed you may instead be eligible to claim a deduction for your own personal super contributions.
  • It’s important to note that there are caps that limit the amount of contributions you can make tax-effectively, so always check that your contributions fall within the cap to avoid a higher tax rate.

Staying on track

Money in your super fund is typically invested in the option(s) you’ve chosen, for example, Global Shares, Australian Shares, Fixed Interest, Global Property, Cash, or a mixture of all. If you don’t make a choice, your money will be invested in the default investment option of the fund. Some funds also offer Lifestage options, which invest your super based on your age. As you get closer to retirement, your investment mix will change to include more defensive assets, like Cash and Fixed Interest.

To help you keep track, your super fund will also send you regular statements to let you know how your savings are going.

Changing jobs

Don’t forget about your super when you start a new job. If you’re able to choose your own fund, simply complete a Super Choice form with your existing super fund’s details and hand it to your new employer.

If you’re unable to choose your own fund, you may want to transfer your existing super into your new fund. Having all of your super in the one fund makes it easier to keep track of your money, as well as potentially helping you save on fees. Before you make any changes to your super, you should consider things such as any insurance cover you may have and any exit fees.

Accessing your money

Generally, your superannuation money needs to stay invested until you’re ready to retire and have reached your ‘preservation age’, which is between age 55 and 60 depending on your date of birth. Unless you’re experiencing severe financial hardship, or you’re incapacitated or seriously ill, you will not be able to access it before then.

Want to know more?

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This article is intended to provide general information only and does not take into account your individual objectives, financial situation or needs. Colonial First State Investments Limited ABN 98 002 348 352, AFS Licence 232468 (Colonial First State) is the Trustee of Commonwealth Essential Super ABN 56 601 925 435 (Fund) and the issuer of interests in Essential Super which is a product of the Fund. A Product Disclosure Statement (PDS) for Essential Super is available from commbank.com.au/super or by calling 13 4074. You should read the PDS and assess whether the information is appropriate for you before making an investment decision. Colonial First State is a wholly owned subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124 (‘the Bank’).The Bank provides certain distribution and administrative services to the Trustee. The Bank and its subsidiaries do not guarantee the performance of Essential Super or the repayment of capital by Essential Super. An investment in Essential Super is via a superannuation trust and is therefore not an investment in, deposit with, or other liability of the Bank or its subsidiaries. An investment in Essential Super is subject to risk, loss of income and capital invested. Taxation considerations are general and based on present taxation laws and may be subject to change. You should seek independent, professional tax advice before making any decision based on this information.