Australian Superannuation

Australian Superannuation – This compulsory “Superannuation Guarantee” system was introduced in 1992 by the Keating Labor Government as a part of the major reform package addressing Australia’s retirement income policies. It was expected that Australia, like other Western nations, would experience a major demographic shift in the coming decades. This may result in the anticipated increase in age pension payments placing an unaffordable strain on the Australian economy.

After its introduction, employers are required to make compulsory contributions to Australian superannuation on behalf of most of their employees. This contribution was originally set at 3% of the employee’s income, and has been gradually increased by the Australian government. Since 1st July 2002, the minimum contribution has been set at 9% of an employee’s regular earnings. The 9% is thus not payable on overtime rates, but it is payable on bonuses, commissions, shift loading and casual loadings.

However, the Australian superannuation guarantee law applies to all the workers, except for those whose earnings are less than $450 per month, or aged below 18 years and above 70 years. Individuals can choose to make extra voluntary contributions to their superannuation and receive tax benefits for doing so.
Generally, the employer has to make the contribution once in three months to the employee’s selected superannuation fund. The total amount that most employees receive is mainly made up of compulsory employer contributions.

Superannuation contributions are invested over the period of the employee’s working life. It depends on both the total compulsory contributions and voluntary contributions made by the employee.