Superannuation is savings paid to you by your employers when you start working for them. There are rules and regulations surrounding super, how much you should be paid, and your chosen super fund you should be aware of. Your superannuation is your retirement fund and is managed by financial institutions to grow your money before you can access it. You’ll be paid your super when you reach your preservation age.
It’s a good idea to get a good understanding of your super because it will fund your retirement. It may seem like a long way away when you’re only 18 and starting out your working life, but the years have a habit of catching up with you and when you get older, you’ll want to make the most out of your superannuation.
What Is Your Preservation Age?
Your preservation age is the age in which you can access your super funds. It’s called your ‘preservation age’ because your super benefits are ‘reserved’ or locked away until you reach an age prescribed by the Australian Taxation Office (ATO) and meet conditions of release. Your super benefits are the sum total of all of the contributions made into your fund plus years of investment.
Your preservation age is not your retirement age. You can retire at any time, however you’ll need to make sure you have an income source to support yourself even if you’re too young to access your super.
You can also continue to work beyond your preservation age. You’ll be able to make contributions into your super fund until the age of 74 under certain conditions. Your savings will still be preserved until you’ve met the conditions of release.
Pro Tax Tip: Early release of your super depends on your health. You can apply for early-release of super if you’re permanently or temporarily disabled, are suffering severe hardship or suffer from a terminal condition or on compassionate grounds. You can work towards the First Home Super Saver Scheme and access your super for buying your first home, but there is eligibility criteria you’ll need to satisfy. Click to read the First Home Super Saver Scheme: What You Should Know.
Preservation Age In Australia
|Date of Birth||Preservation Age|
|Before 1 July 1960||55|
|1 July 1960 – 30 June 1961||56|
|1 July 1961 – 30 June 1962||57|
|1 July 1962 – 30 June 1963||58|
|1 July 1963 – 30 June 1964||59|
|From 1 July 1964||60|
Your preservation age is a different age to the accessing the aged pension. The aged pension depends on your date of birth and you must meet eligibility criteria to be able to receive it. On 1 July 2021, Age Pension age increased to 66 years and 6 months for people born from 1 July 1955 to 31 December 1956, inclusive. If your birthdate is on or after 1 January 1957, you’ll have to wait until you turn 67. This will be the Age Pension age from 1 July 2023.
You must meet residence rules, an income test and an assets test to qualify for the aged pension.
When Do You Earn Super
New rules for when you begin to earn super have been brought in and are affective from 1 July 2022. ISuper is now payable from from the first dollar you earn in salary or wages in a calendar month. Your salary or wages includes any overtime you work.
It doesn’t matter is you work full-time, part-time or on a casual basis. You can also earn a super pension or annuity while working, be a temporary resident, a company director or a family member working in your business.
If you’re under 18 years old, you should be paid super if you work more than 30 hours per week or if you’ve been paid $450 or more before tax in salary or wages in a calendar month.
An employer is not required to pay super if you are:
- A non-Australian resident and you’re paid to do work outside of Australia
- An Australian resident paid by a non-resident employer for work done outside of Australia
- A senior foreign executive on a certain class of visa
- Temporarily working in Australia for an overseas employer and are covered by the super provisions of a bilateral social security agreement
When you start work and are entitled to be paid super, your employer should offer you a choice:
- You can open an account of their choosing, or
- You can open your own account and ask them to pay the contributions in on your behalf
You can choose your own super fund and take that find with you wherever you’re employed. This is known as a ‘stapled super fund’ that is linked to you, rather than an employer. This fund will travel with you from job to job and enables you to stop the extra fees and charges you’ll incur with by having different super accounts and having to open a new super account every time you start a new job. Your employer should offer you a stapled super fund form and supply it to the ATO on your behalf.
Pro Tax Tip: Some super funds offer higher risks and returns, while others offer greater security and lower returns.
The stapled fund should be a complying superannuation funds, include a retirement savings account and complying superannuation scheme.
Types Of Funds
There are generally five types of funds to choose between:
- An industry fund is open to everyone. You’ll be able to join if you work in a particular industry or under a particular industrial aware and your employer signs up with the fund
- A retail fund is run by financial institutions and it open to everyone
- A public sector fund is open to Commonwealth, state and territory government employees and may be offered defined benefits funds to their members
- A corporate fund is generally only open to people working for a particular employer or corporation. Members may be offered defined benefits
- A self-managed super fund works like other funds, but are nor manages by an outside party They are managed and run by you, the trustee.
You should always be aware of which super fund you’re a member of, the amount you’re earning and that your employer is making payments on your behalf. If you’re unsure, your tax agent can check the details for you and call the ATO into action if you’re not being paid.
Accessing your super is a major financial decision and it’s recommended that you seek advice from a professional, independent professional. An advisor can help you make decisions about accessing and building your super based on your individual circumstances.