What is Superannuation in Australia?

What does superannuation mean in Australia?

Superannuation, or “super” as it’s commonly called in Australia, is a government mandated retirement savings fund. It’s designed to help Aussies have enough money to live on when they retire from work. Every employer is required to contribute a percentage of an employee’s earnings into a super fund, which is set aside and invested until retirement. As of now, the mandatory contribution rate is 11% of an employee’s earnings, and it’s set to gradually increase in the coming years. This money is paid by the employer and is ‘on top of’ your salary - not deducted from your salary.

The money in your super fund grows over time, thanks to investments managed by the fund. You can’t normally access this money until you retire or meet specific conditions, known as ‘preservation rules’. However, the government has made some exceptions, like allowing early access for severe financial hardship or specific medical conditions. You can also access this money early if you are a temporary resident that is permanently leaving Australia.

Besides just being a nest egg for retirement, superannuation can also offer some tax benefits. Personal (non-employer) contributions made to your super fund are taxed at a lower rate compared to regular income, making it a tax-effective way to save for retirement. Plus, managing how your super is invested can give you some control over your financial future, and there are home deposit savings programmes available to citizens through super in certain circumstances. It’s a pretty good deal to ensure you’re not just relying on the government pension later in life.

What is the equivalent to superannuation in Latin America?

The equivalent to super in some other LATAM countries is:

• 🇨🇴 Colombia: Fondo de Pensiones - This is a mandatory pension system where both employees and employers contribute to fund retirement, disability, and survivor benefits.

• 🇦🇷 Argentina: Sistema Integrado Previsional Argentino (SIPA) - Managed by the Administración Nacional de la Seguridad Social (ANSES), this system involves contributions from both employers and employees to fund retirement pensions.

• 🇨🇱 Chile: AFP (Administradoras de Fondos de Pensiones) - This is a private pension system where workers must contribute a portion of their earnings to private pension funds managed by the AFPs.

• 🇧🇷 Brazil: Previdência Social - This is the social security system that provides pensions and other benefits, funded by contributions from employers, employees, and the self-employed.

• 🇲🇽 Mexico: Sistema de Ahorro para el Retiro (SAR) - This is a mandatory retirement savings system where contributions are made by the employee, employer, and the government to individual accounts managed by private companies known as AFOREs.

How is superannuation normally used in conversation?

Here are some examples of how superannuation (or 'super') is used in day to day life in Australia:

I’m trying to decide which superannuation fund offers the best returns and lowest fees.

Make sure you give the same super fund details to each employer if you have multiple jobs.

Im leaving Australia permanently soon - can I get my superannuation money?