Australia’s superannuation system is there to make sure you have enough income when you retire, but many don't give it a second thought until they're older.
Do you know your own 'super' balance and how it compares to others your age?
Xavier O’Halloran, director of advocacy group Super Consumers Australia, says it’s never too early to start paying attention to your balance.
“It’s a pretty sizeable chunk of your income. If your income was reduced by 10 or 12 per cent tomorrow, you’d really notice — and that’s about how much is going into superannuation out of your pay packet.”
“So it’s worth keeping an eye on what’s going on. You want to make sure that you’re doing everything that you can to set yourself up for a good retirement.”
You can access your reported balance up to this financial year by under linked services. This allows you to view the details of all your superannuation funds in one place.
Then you can compare the total amount to other people your age and gender using the SBS News interactive below.
The interactive uses data provided by AustralianSuper but includes other funds across Australia.
Checking your balance via your specific fund will give you your latest balance.
Professor Susan Thorp, a finance professor at the University of Sydney’s Business School, said the data reflects the gender gap that persists between women and men through all age groups.
“The bad news for women — or for men who take breaks out of the workforce or who earn lower wages — is that accumulations tend to be related to earnings. If you're taking extended breaks from your working life, or you're taking those young, that tends to have a bigger impact on your overall accumulation,” she said.
Women in Australia on a median income will earn just over $1 million less over their working lives on average than their male counterparts, according to research released by the Australia Institute’s Centre for Future Work in March. Those women will retire with $136,000 less in superannuation than men and accumulate approximately $151,000 below what is considered by the Association of Superannuation Funds of Australia (ASFA) to be a “comfortable” retirement.
Source: SBS News
“Superannuation is a tax structure like individual income tax, and so we each have our own account. But when we think about retirement, most of us move as partners or in families and we tend to pool our economic resources,” she said.
“So the situation for an individual in terms of their superannuation accumulation might look quite different when we think of ourselves as couples or part of households.”
Why does superannuation matter?
Joey Moloney, senior associate in the Economic Policy Program at the Grattan Institute, described employer superannuation contributions as one of the three “pillars” of Australia’s retirement income system.
Those pillars are compulsory employer superannuation contributions (introduced in the form of the Superannuation Guarantee in 1992), the age pension, and private savings and voluntary superannuation contributions.
The majority of employers are required to pay a percentage of your earnings into a superannuation fund, which then invests the contributions until you retire. They pay these contributions on top of your salary. The current standard rate is 10.5 per cent of what you earn from ordinary hours of work, and that will increase to 12 per cent by 2025.
You can also make voluntary contributions to your superannuation account.
“For most people, it’ll work together with an age pension entitlement, to make sure they have enough money for an adequate standard of living when they retire,” Mr Moloney said.
Professor Thorp said superannuation shouldn't be confused with the age pension.
“The age pension is there as a safety net to protect people who are retired from poverty, and to provide for themselves and their families,” she said.
“The superannuation system is there to help people benefit from a lifestyle in retirement that is more similar to the one they enjoyed while they were working.”
The government’s Moneysmart website offers a to estimate your balance at retirement based on several assumptions.
How much you’ll need also depends on your costs in retirement, it states, such as paying off a mortgage, travel and medical expenses, as well as the lifestyle you want.
The ASFA has a Retirement Standard that shows the lump sum amount needed by the average Australian at age 67 to fund a comfortable and modest retirement. It assumes the retiree will also receive a part-age pension, owns their own home outright and is relatively healthy.
ASFA updated its estimates in late March to reflect the impacts of that Australia is currently experiencing.
Source: SBS News
“We encourage people when they’re thinking about how much they actually need to retire, to look at their own spending habits and get an idea of what they need month to month,” he said.
“You can use that as a starting point to feed into calculators to get a more personalised picture of how much you’d actually need to save.”
Professor Thorp said as well as looking at your superannuation balance, it’s more important to consider the performance of your fund, your employer contributions, and your investment options.
Last week, industry regulator the Australian Prudential Regulation Authority (APRA) released new analysis which found one in five so-called "Choice" investment options "significantly underperformed" based on its benchmarks. Choice super products are funds that a worker actively decides to join.
Professor Thorp said it's also important to consolidate your superannuation, which means transferring your funds into one account if you have several from different jobs.
“There are fixed fees associated with managing superannuation. If you have more than one account you pay those fees several times,” she said.
Moneysmart also recommends checking your current accounts to see if changing funds will affect your employer contributions and if you have any insurance through the fund.
Plus, once you’ve chosen a new fund or an existing one, it’s important to pass those details to your employer.
People who moved to Australia as an adult should be mindful that they will be starting their superannuation savings later in life than many others, Mr O’Halloran said.
“You can make extra contributions if you need to catch up.”
He recommended looking into portability arrangements, through which money from overseas funds can be transferred to Australia.
Superannuation funds can also be taken with you if you leave Australia under certain conditions.
The myGov website has to help people from non-English speaking backgrounds understand superannuation.
Why has superannuation been in the news recently?
Superannuation can generally be accessed when a person retires and reaches what's known as their “preservation age”, which is between 55 and 60 depending on when they were born. But it can be accessed early under special circumstances and that has been the subject of recent debate.
During the COVID-19 pandemic, the then-Coalition government expanded the reasons people in Australia could use to dip into their funds early. It also proposed to buy a property - a policy to which Opposition leader Peter Dutton has recommitted.
In February, as “contradictory, sometimes counterproductive and often costly”, and promised to “”. The government has also released a consultation paper for legislation that would define the objective of superannuation.
Federal Treasurer Jim Chalmers has promised to "end the super wars". Source: AAP / Mick Tsikas
“I'm hoping that the objective allows us to look at the super system as it is right now and address the things that aren't equitable or sustainable.”
The Labor government has just announced employers will be required to pay their employees' super at the same time as their salary and wages in future, instead of quarterly.
It said the change, set to come into effect from 1 July 2026, will "make it easier for employees to keep track of their payments and harder for them to be exploited by disreputable employers".
According to Australian Tax Office (ATO) estimates, $3.4 billion worth of super went unpaid in 2019-20.
The government has already , announcing plans to tax the 0.5 per cent of people in Australia with balances above $3 million at a higher rate, saving about $2 billion a year.
A and proposed other measures to reform the system.
Shadow treasurer Angus Taylor said those measures would undermine confidence in the system and shouldn't be adopted.
This article is an introductory guide to superannuation. SBS News is not able to provide financial advice.
