Superannuation
Superannuation is Australia's compulsory retirement savings system: employers pay a percentage of your salary into a fund, invested and taxed concessionally until retirement.
Also called super, superannuation guarantee, retirement fund
The superannuation guarantee requires employers to contribute a set percentage of ordinary time earnings to a complying fund. On a $90,000 salary at 12%, that is $10,800 a year before any investment return.
The rules that shape the balance are the contribution caps, the 15% tax on contributions and earnings in accumulation, and the age at which withdrawals become tax-free. Salary sacrifice and personal deductible contributions reduce take-home pay now to build the balance faster.
Because contributions arrive across a working life, compounding does most of the work: the earliest years matter far more than the rate in any single year.
Common questions
How is the super guarantee calculated?
As a percentage of ordinary time earnings, paid on top of your salary. At 12% on $90,000, the employer contributes $10,800 for the year.
Does extra super reduce my take-home pay?
Salary sacrifice does reduce take-home pay, but the contribution is taxed at 15% instead of your marginal rate, which is where the saving comes from.