Superannuation might be the last thing on your mind as you first enter working life. But while actually using your super may be a long way off, it's still a good idea to know all about super and what to consider when choosing the right fund for you and your needs.


What is superannuation?

To put it simply, super is money that's put aside by your employer over the course of your working life. It allows you to retire with a comfortable amount of money in the bank to live on. In Australia, from 1 July, 2022, your employer must pay a minimum of 10.5% of the value of your wage into your super fund. If you're 18 years or older and you're working while you're studying, you're eligible for employer super contributions, regardless if you're a temporary resident of Australia working full-time, part-time or as a casual worker.

You can't access this money until you retire, are between the ages of 55 and 65 or leave the country permanently. If you're an international student and know that you will be leaving Australia permanently, then you can claim that super back. It's called a departing Australia superannuation payment (DASP) and is taxed differently when you leave Australia. If you made any contributions to your super account after paying income tax these will be tax free. Some funds will have an untaxed component, which will be 45% or 65% if you are on a 417 or 462 visa. The most frequent super types will generally be taxed at 35%, but if you're on a 417 or 462 visa, you'll be taxed at 65%. You can find out more information here.

Things to consider when choosing a superannuation fund:

Fees and costs

Fees and costs are needed in order for your super fund to run, ensuring the management of your account and investments. But high fees can be detrimental and can cut into your savings. Consider how much you'd be paying for not only administration costs but also transaction, performance and insurance costs when looking at what certain super funds offer.

Insurance options

Superannuation funds can also offer insurance, meaning you have adequate coverage if something out of the blue happens. They can cover you if you can't work and can support your family if something happens to you. Have a look at what their insurance option covers.

Funds that allow you to combine your super

Once you've had a few jobs up your sleeve, you often find that you have multiple super funds floating around. It's a good idea to consolidate your super funds into one which suits your needs best. Find out more about consolidating your super here.

Types of super funds to consider

There are numerous types of funds to choose from, with most falling under specific groups.

  • Retail super funds are usually available to anyone and are run by banks and investment companies with the company running the fund aiming to keep some of the profit.

  • Industry super funds are profit for member organisations, meaning that the profits are for the benefits of members. Anyone can join the bigger industry funds.

  • Public sector super funds are for government employees, they usually have lower fees with profits going back to members.

  • Corporate super funds are arranged by an employer and can be managed by a board of trustees which the employer appoints. The employer can also use a retail or industry fund that's only available to their employees.

  • Self-managed super funds are managed by yourself, where you put the money you would normally put in other super funds into your own. These can be challenging to undertake and require a lot of work.

For more information on superannuation and how to choose the best one for you, MoneySmart can help you out. If you need help or just someone to talk to, our Sonder support team is available 24/7 to chat whenever you need it.


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Information sourced from: MoneySmart, Hesta, Rest, Australia for Students, Russell Investments, Australian Super and Student Super

Image credit: Bench Accounting on Unsplash

All content is created and published for informational purposes only. It is not intended to be a substitute for professional advice.

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