Super basics

26 September 2023

Super basics

When it comes to superannuation, it can be easy to get confused by all the jargon and technical talk. In reality, super is fairly straightforward. At Child Care Super, we want you to be in the know with your super, so we’ve broken it down into simpler terms, so you can take control of your future.

What exactly is super?

In a nutshell, super is a way to save for your retirement. It's like a little like a savings account you build over the years to support you when you stop working. There are two big differences though – you can’t access it until you retire (excluding a few exceptions), and rather than sitting in a bank account doing nothing, the money is invested to grow your money over time.

Why do we need super?

Compulsory super was created as a way to support us when we retire, especially with our growing population of seniors. The Australian government wanted to create a system where we can put money aside for a better lifestyle during retirement.

So, how does it actually work?

Let's take a peek into the story of superannuation:

Step 1: The Super Guarantee Contributions (SGC) Scheme

In 1992, the government introduced the Superannuation Guarantee Contributions (SGC) scheme. Basically, it means employers must add a certain percentage of our salary into a super account. Initially, it was 3%, but it gradually climbed to 9% by the early 2000s. And by mid-2025, it will reach 12%.

Step 2: Contributions

Your employer should regularly pay 11% of your salary into your super fund through the Superannuation Guarantee (SG). This’ll go up to 11.5% in July 2024. But wait, there's more! You can also boost your super by making extra contributions yourself. And guess what? The government may even give you a helping hand with government co-contributions.

Step 3: Watch your super grow

What a lot of people don’t know is the money in your super account is invested, and the growth is reinvested by your fund to help the balance grow. This is called compound interest. This is what makes superannuation different to a standard savings account.

Step 4: Enjoy your super in retirement

Imagine this: you've retired and are no longer working, so your regular income has stopped. That's where your super comes in handy! You can access your super savings to support your dream lifestyle during retirement. There’re a few different ways you can use your super, you can take a lump sum payment, give yourself a regular payment, or you can keep it invested.

Who gets super?

If you're 18 years or older, your employer should be paying super for you. If you're younger than 18 and working over 30 hours a week, you're also entitled to super! If you’re still not sure, the Australian Tax Office (ATO) has this great tool that you can use to find out whether you’re entitled to super from your employer.

Want to learn more about super? We’ve gone into all the nitty gritty details on our website.