Superannuation is a union-initiated long-term savings plan designed to help people in their retirement. The ‘trick’ with superannuation is that you can’t access your money until you are at least 55 (except in very special circumstances); that means it keeps growing over the years for you to enjoy later. 
How does it work? Money is put into your fund by your employer.
Once you are over 18 and earning more than $450 per month, your employer is legally required to deposit an extra nine percent of your wage to your superannuation fund. This is called the compulsory employer contribution.
You can also make voluntary contributions from your pay or savings to increase your final payment. In some cases there are tax advantages for doing this.
Your money is invested to make it grow. In most superannuation funds you can have a say over the type of investment and the balance between risk and return. For example, you may be able to choose to have your funds invested in local shares, property or fixed interest – or a mix of these and others. But just like the share market and interest rates, the returns can vary and even be negative – so it’s important to choose wisely and get advice.
Why is it important? It's about saving for your future.
Some medical experts think that people born today in Australia may have a life expectancy of nearly 100 years – with a retirement age of around 65 years that means this generation may have to fund a 30 or 40 year retirement.
While there is likely to always be some kind of age pension – many people will want to have extra money to enjoy their long years in retirement. Also over the next 40 years, the proportion of the population over 65 years will almost double to around 25 per cent.
Australia’s answer to these issues is superannuation – long-term savings to help more people to enjoy their retirement. Superannuation puts money aside over your working life to fund your retirement depending less on a government pension or other investments.
The good news is that the money is likely to grow and grow…currently there is 1.2 trillion dollars invested in Australian super. How much of it will be yours is in part up to you.
What types of funds are there? There are large and small funds.
There are a few types of funds available, including the following:
>Industry funds – run jointly by employers and unions solely to benefit their members.
>Retail funds – run by financial institutions for profit.
>Employer Stand-alone funds – run by one employer for their employees.
>Self-managed funds – run by an individual for him or herself.
Does everyone get superannuation? No, you have to meet certain criteria.
To be eligible to receive superannuation contributions, you must earn over $450 per calendar month, be under the age of 70 years old, and working on a full time, part time or casual basis.
If you’re under 18 years of age you must also work a minimum 30 hours a week to get superannuation contributions. However some Awards may have superannuation entitlements included in them – regardless of the hours you work and what age you are.
Apprentices and trainees are also entitled to superannuation if they work more than 30 hours per week and earn more than $450 per month.
Boosting your superannuation: make voluntary contributions.
Employees can top up their super with voluntary contributions, made in addition to the compulsory employer contributions. Voluntary contributions can be made in a lump sum format, or through regular contributions deducted from your pay. This is called salary sacrificing.
Government co-contributions: The federal government will also match your personal contributions up to a maximum of $1000 per year if you earn less than $61,920. The amount the government contributes depends on how much you earn each year.
Extra benefits: insurance and death benefits.
Extra benefits that often come with having an industry or retail superannuation fund. This includes discounted rates on life and travel insurance as well as financial advice.
There is also a ‘death benefit’ built into superannuation, so if you die your remaining superannuation will be left to a nominated person or estate.
Can I choose my super fund? Yes, and you can also change your fund.
There are many super funds available. Some of these will be better for you than others, depending on what kind of job you have and what benefits they offer. To change funds you generally have to fill out a transfer form from your fund manager.
To start learning about the different types of funds available visit www.industrysuper.com or www.superannuation.asn.au
I want to find out about my super…
The amount of money your employer provides should be stated on your pay slip. You can also access your details and manage your super by contacting your fund manager. Most super funds also have a website where you can login to view your account.
There is a specific superannuation fund for just about every industry. If you are not sure about which superannuation fund you’ve got, or if you even have one, speak to the people at work who do your pay and they will have the information for you. Or, for more information you can head to www.industrysuper.com
Links
www.moneysmart.gov.au www.ato.gov.au Think you have super knowledge of superannuation? Test it at our superannuation quiz here!