Superannuation

Super is an excellent way to save money for your retirement because of the tax concessions and other government benefits.

Super funds may also offer additional benefits, such as life insurance cover, and total and permanent disability insurance (insurance if you become disabled or sick for an extended period of time).

Who can join a super fund?

In most cases, you join a fund as soon as you're employed (or at least within three months of being employed), because by law your employer must pay contributions into a fund on your behalf if you are eligible for compulsory contributions.

Generally, to be eligible you must be under 70 years of age, working on a full-time, part-time or casual basis and paid over $450 (before tax) per calendar month. If you are under 18 you have to meet the additional requirement of working more than 30 hours a week to be eligible.

If you're self-employed, you can decide if you want to join and contribute to a fund. Most self-employed people can claim a full tax deduction for contributions they make to their super until age 75.

How much gets paid into your super?

If you are eligible for compulsory contributions, your employer must pay a minimum of your 'ordinary time earnings' into your super account each quarter. This means 9% of the amount you earn for your ordinary hours of work. These payments are called 'super guarantee' payments. For example, if your ordinary time earnings for the year are $50,000 your employer must pay $4,500 into your super account.

Your employer or you may pay extra money into super at any time, though tax concessions may not apply to very high contributions (there's an annual limit to how much you can contribute while taking advantage of tax concessions). If you're self-employed or not employed, you decide how much to pay in. Once you reach age 65 you need to meet a work or 'gainful employment' test to contribute, and contributions are generally not allowed after you reach age 75.