Australian superannuation for you and your employees

Superannuation is beneficial for both you and your employees

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Employers have been given even more responsibilities as far as their employees are concerned, ever since superannuation has been made compulsory. It's not simply that you must make sure that all your employees are covered under a superannuation fund, you also have to make certain contributions into the fund based on a percentage of their before tax earnings.

From time to time the Federal Government determines what this percentage will be, as it is often the result of an agreement with unions that the employer superannuation contribution will be increased instead of having to pay a salary increase. This way, the government manages to keep a lid on inflation while at the same time increases the employee's benefit when they retire.

AustralianSuper - Pre-mixed, Balanced Super Fund

AustralianSuper - Pre-mixed, Balanced Super Fund

Choose from an extensive range of investment options and enjoy discounted rates on select banking products when you join AustralianSuper.

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Requirements of employers in regard to employee superannuation

Besides having to make a contribution into each of their employees superannuation funds an employer will also have to ensure that all new employees complete a superannuation Standard Choice form including a Taxation File Declaration form.

Employees are allowed by law to choose their own superannuation fund. It might be a fund they have been a member of for many years or it might be a fund they feel offers them a better deal. Whatever their reason, their right to choose has to be honoured by their employer.

If an employee doesn't have any particular favourite the employer has to sign the new employee up into a default fund organised by the employer for that very purpose.

Further requirements employers have to adhere to as far as superannuation for their employees are concerned, is that of paying their employee's contributions into their fund on their behalf, at least quarterly. The contribution amount will have previously been withheld from the employee's pay. Employers are also duty bound to keep proper records of all transactions, as well as all notices concerning the fund that they have forwarded on to their staff members.

The ATO can assist with up-to-date information on their website

Due to immense paperwork involved,many small business owners are cautious about hiring new staff especially when the business itself is new and you are not certain of its long term future. Recruiting adequately-qualified people to work for you is a task in itself but it is a task that must be done as having the right person in the right job is a major ingredient in your business success.

To make things easier for business owners, the Australian Taxation Office (ATO) has set up an online assistance website that explains exactly who you have to pay the superannuation guarantee for. The website also includes a superannuation guarantee eligibility tool that will show you the difference between an employee and a contractor.

Its a good practice to include yourself in your employees superannuation fund

As a small business owner you will be regarded as being self employed and as such you won't have to include yourself in any compulsory superannuation fund. However, because it’s not compulsory doesn't mean you can't include yourself as you can. In fact, you should – by including yourself in a superannuation fund you will be building up a retirement fund for yourself in your latter years.

At the same time it’s a good place to put your life, trauma and income protection cover because all payments into the fund are made before tax is calculated on your earnings therefore lowering your taxable income by that amount.

How an allocated pension works

When your superannuation fund matures you can have the savings from the fund paid to you as a lump sum or you can reinvest the money so that it gives you an allocated pension. An allocated pension is an investment account that will give you either a flexible, or regular income. Most allocated pension schemes offer a variety of options but behind them all is the principal of growing your investment while generating a taxation advantaged income for your retirement years.

With such a scheme you will have the final say on the regularity and size of the income payments you want to receive as long as they remain inside government-prescribed limits. If you later find the income level is unsuitable you can change it to something more suitable as long as you keep within the prescribed limits. It will be up to yourself to allocate where you want your money invested and you will be able to make as many cash withdrawals as you wish on top of the regular payments you have previously organised.

The payments you receive from your allocated pension plan can be kept free of you having to pay any tax and you can still qualify for the Centrelink pension if your keep the payments within certain limits.

The get the best benefit from an allocated pension plan it is advisable to get first hand advice from a financial advisor. He or she will know what the withdrawal limits are that will determine whether you have to pay taxation or be eligible for a Centrelink pension.

Choosing a super fund

Name Product Past Performance - 1 Year Past Performance - 3 Years Performance - 5 Years Calculated fees p.a. on $50,000 balance
AustralianSuper - Pre-mixed, Balanced option
0.56%
6.67%
7.37%
$411.18
AustralianSuper is an award-winning industry super fund and the largest super fund in Australia. The Balanced fund invests in a mix of different assets like shares, property and cash.
Virgin Money Super - Lifestage Tracker
-0.86%
6.46%
$358
Virgin Money Super's Lifestage Tracker invests in a range of different assets in line with your age, reducing your risk as you get older, and has some of the lowest fees in the market.
Australian Ethical Super Balanced
2.77%
6.88%
6.88%
$622
Certified by the Responsible Investment Association Australasia.
Australian Ethical seeks to invest in companies that have a positive impact on the planet, people and animals, such as renewable energy and healthcare while avoiding investments in coal, oil, tobacco and gambling.
Sunsuper Lifecycle Balanced
-1.69%
5.7%
6.45%
$453
Sunsuper is an award-winning super fund with more than 1.4 million members. Its Lifecycle Balanced option invests your super in a mix of growth assets, and reduces your risk when you're near retirement.
QSuper Lifetime - Aspire 1
-0.35%
5.97%
6.91%
$315
QSuper is one of the largest member-owned funds in Australia. The QSuper Lifetime fund adjusts your investments each 7-10 years as you get older, so you're not taking on too much risk.
Spaceship GrowthX
11.93%
14.45%
$536
This is a high-risk investment option that aims to deliver high returns over the long term.
Spaceship's Growth X fund invests heavily in Australian and international shares, with a focus on technology stocks. Performance figures and fees supplied by Spaceship, not Chant West.
Australian Catholic Super Lifetime - Grow
-0.39%
N/A
$588
A Catholic super fund open to all Australians and designed for people working in Catholic education, healthcare or aged care.The Lifetime One fund option changes your investment mix as you get older.
Aware MySuper Life Cycle Growth
1.33%
6.34%
6.56%
$549.42
Aware Super is a not-for-profit fund with more than 750,000 members. The MySuper product invests your super in a pre-mixed Growth fund until you’re 60, then it’ll switch to Balanced.
LUCRF MySuper Balanced
-0.91%
4.7%
5.2%
$497
LUCRF Super is an industry super fund open to all Australians with 11 different investment options available. Its default MySuper Balanced option is a simple, diversified portfolio designed to suit most members.
HESTA Balanced Growth
N/A
5.84%
6.27%
$538.53
HESTA is an industry super fund for the health and community services sector and open to all Australians. The Balanced Growth fund invests in a mix of asset classes without taking on too much, or too little, risk.
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The information in the table is based on data provided by Chant West Pty Ltd (AFSL 255320) which is itself supplied by third parties. While such information is believed to be accurate, Chant West does not accept responsibility for any inaccuracy in such information. Chant West’s Financial Services Guide is available at https://www.chantwest.com.au/financial-services-guide . Finder offers no guarantees or warranties about the data and we recommend that users make their own enquiries before relying on this information. Performance, fees and insurance data is based on each fund's default MySuper product. Where the performance, fees and insurance data for the MySuper fund vary according to the member's age, results for individuals between 40-49 years of age have been shown. Past performance is not a reliable indicator of future performance.

*Past performance data is for the period ending June 2020.

Disclaimer: Performance, fees and insurance data is based on each fund's default MySuper product. Where the performance, fees and insurance data for the MySuper fund vary according to the member's age, results for individuals between 40-49 years of age have been shown. This article is general advice. You should consider your own personal circumstances before deciding if a superannuation product is right for you. Superannuation is a long term investment and past performance is not indicative of future performance.

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2 Responses

    Default Gravatar
    SAugust 4, 2013

    Where do you send Super for an employee you can’t contact? I have no Policy details etc…

      Avatarfinder Customer Care
      ShirleyAugust 5, 2013Staff

      Hi S,

      Thanks for your comment.

      I’ve emailed you about your query.

      Hope this helps,
      Shirley

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