Superannuation, commonly known as super, is Australia’s retirement saving scheme.

Super became a household name in Australia in 1992 with the introduction of the ‘Super Guarantee’ by the Keating Government. The legislation required employers to pay the equivalent of 9% of a staff member’s salary into a designated super fund. The Gillard Government is gradually boosting the Super Guarantee to 12%.

In addition to employer contributions, individuals are encouraged to make personal contributions to superannuation through tax incentives. However, there are limits on how much any one person can put into their super in any given year. These are known as contributions caps.

Personal contributions are classed as ‘non-concessional contributions’. These types of contributions are not taxed as long as you stay within the cap, which in 2011/12 was $150,000.

Superannuation exists for the purpose of providing a pension in retirement and therefore strict conditions must be met before the funds can be accessed.

Except in special circumstances, such as severe financial hardship or permanent incapacity, you can’t withdraw your super until you reach the ‘preservation age’ and satisfy a ‘condition of release’. The preservation age is 60 years old for most people. For those born before 1 July 1960 it is 55, and there is a phased transition for those born up to 30 June 1964.

Find out more about superannuation by browsing the resources in our Setting up an SMSF and Running your fund pages, or read the latest news on the Switzer Super Report homepage.

 

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Anyone should, before acting, consider the appropriateness of the information in regards to their objectives, financial situation and needs and, if necessary, seek professional advice.