Superannuations Frequently Asked Questions

On the day you claim the age pension, you must be in Australia and you must have been an Australian resident for at least 10 years (with no break in your stay for at least five of those years). The following exceptions apply:

• You’re exempt from the 10-year rule if you’re a refugee or former refugee
• You’re exempt from the 10-year rule if you’re getting Partner Allowance, Widow Allowance or Widow B pension
• You can claim the age pension with only two years of residency if you’re a woman whose partner died while you were both Australian residents
• You might be able to claim the age pension if you’ve lived or worked in a country that has a social security agreement with Australia

Superannuation is calculated at the rate of 9.5 per cent of your ‘ordinary-time earnings’. (For most people, ordinary-time earnings are their gross annual salary or wages.) So if you had a salary of $50,000, your superannuation would be 9.5 per cent of that, or $4,750. This would be paid on top of your salary.

As the Australian Taxation Office explains, some items are excluded from ordinary-time earnings. They include:

• Overtime work paid at overtime rates
• Expense allowances that are fully expended
• Expenses that are reimbursed
• Unfair dismissal payments
• Workers’ compensation payments
• Parental leave
• Jury duty
• Defence reserve service
• Unused annual leave when employment is terminated
• Unused long service leave when employment is terminated
• Unused sick leave when employment is terminated

Although the superannuation guarantee is currently at 9.5 per cent, it is scheduled to rise to 10.0 per cent in 2021-22, 10.5 per cent in 2022-23, 11.0 per cent in 2023-24, 11.5 per cent in 2024-25 and 12.0 per cent in 2025-26.

Some superannuation funds will allow you to transfer your insurance cover, without interruption, if you switch. However, others won’t. So it’s important you check before changing funds.

If your employer collapses, a trustee or administrator or liquidator will be appointed to manage the company. That trustee/administrator/liquidator will be required to pay your superannuation out of company funds.

If the company doesn’t have enough funds, in some cases company directors will be required to pay your superannuation. If the directors still don’t pay, the Australian Securities & Investment Commission (ASIC) might take legal action on your behalf. However, ASIC might decline to take legal action or might be unsuccessful.

So there might be some circumstances when you don’t receive all the superannuation you’re owed.

When you start a job, your employer will give you what’s called a ‘superannuation standard choice form’. Here’s what you need to complete the form:

• The name of your preferred superannuation fund
• The fund’s address
• The fund’s Australian business number (ABN)
• The fund’s superannuation product identification number (SPIN)
• The fund’s phone number
• A letter from the fund trustee confirming that the fund is a complying fund; or written evidence from the fund stating it will accept contributions from your new employer; or details about how your employer can make contributions to the fund

You should also provide your tax file number – while it’s not a legal obligation, it will ensure your contributions will be taxed at the (lower) superannuation rate.

No, self-employed workers don’t have to pay themselves superannuation. However, if you do pay yourself superannuation, you will probably be able to claim a tax deduction.

You’re automatically entitled to superannuation if:

• You’re over 18 and earn more than $450 before tax in a calendar month
• You’re under 18, you work more than 30 hours per week and you earn more than $450 before tax in a calendar month

If you want to have more control over your retirement savings and how they’re invested, you can consider choosing to set up a Self-Managed Superannuation Fund (SMSF). The SMSF would be used instead of putting your money in an industry or retail super fund.
 
The rules for operating an SMSF are outlined in a legally binding document known as the SMSF trust deed. It lays out the fund's purpose, which should be limited to providing retirement benefits to fund members. An SMSF trust deed also contains: 

• The names of the members and trustees
• The procedure for appointing and removing trustees
• The specific types of investments that the fund can make
• How the benefits will be paid out at retirement (as a lump sum or in the form of an income stream) 

Once the SMSF trust deed is finalised, an SMSF must be operated according to the procedures laid out in the deed. If the SMSF does not function according to the trust deed, severe penalties may be imposed on the members and trustees of the fund. If the SMSF is audited, the members are required to provide the trust deed to help the auditor check whether the fund's operations comply with the deed or not.
 
If you plan to set up an SMSF, you can purchase a standard SMSF trust deed online. You can also have a financial advisor assist you with the setup and have them draw one up. It’s also essential to review and update your SMSF trust deed from time to time to keep it up to date with any changes to superannuation legislation. If you want to change the SMSF investment strategy or invest in an asset not listed in the trust deed, you’ll need to revisit the trust deed and update the provisions to ensure there is no conflict.

Employers are required to pay superannuation to all their staff if the staff are:

• Over 18 and earn more than $450 before tax in a calendar month
• Under 18, work more than 30 hours per week and earn more than $450 before tax in a calendar month

This applies even if the staff are casual employees, part-time employees, contractors (provided the contract is mainly for their labour) or temporary residents.