June 30 2023

What is super/superannuation? How does super work?

How much do you know about superannuation? Maybe a little or maybe a lot. Either way, we’ve broken it down to help you get your head around it.
Piggy bank with a question mark enclosed in a white circle above Piggy bank with a question mark enclosed in a white circle above

Superannuation is likely to be one of your largest financial assets, so it’s important you understand how it works.

What is superannuation?

Superannuation, often shortened to ‘super’, is a retirement savings plan in Australia that is intended to help you save for your retirement.

Generally, employees are eligible to receive super payments from their employer, known as super guarantee (SG). The SG contribution is calculated as a percentage of your pay and is contributed into your superannuation fund.

On top of what you get from your employer, you can also make additional voluntary contributions to your super fund, up to an annual cap. Most super funds are managed by professional investment managers who invest the contributions on behalf of their members.

The main objective of a super fund is to generate returns on the investments that will help to grow their members’ balances over time. When you reach your preservation age, or meet other conditions of release, you can access your superannuation as a lump sum, or as regular payments.

How does superannuation work in Australia?

If you’re 18 years or over and working in Australia, you are generally entitled to compulsory superannuation contributions from your employer.

You’ll receive super contributions from your employer regardless of whether you’re a full-time, part-time or casual worker, or even if you’re a temporary resident of Australia.


Did you know?

From 1 July 2022, the Federal Government removed the $450 monthly threshold for compulsory superannuation payments (known as ‘superannuation guarantee’ or ‘SG’ contributions), meaning you’ll receive SG contributions from your employer no matter how much you earn.

From 1 July 2023, the minimum SG contributions your employer must pay is 11% of your ordinary time earnings (OTE). OTE are what you generally earn for your ordinary hours of work.

I’m under 18 years old, what about me?

If you’re under 18 years, to be entitled to SG contributions from your employer you must work more than 30 hours per week.

When can I access my super savings?

The purpose of super is to help you put money aside for your future retirement. Everyone can access their super when they turn 65 years old, even if they’re still working and haven’t retired. Otherwise, you can withdraw your super:

  • When you reach preservation age: Your preservation age is generally the earliest age you can access your super, and it's calculated based on your date of birth.
  • Under the transition to retirement rules, while continuing to work.

In some circumstances, like severe financial hardship or on compassionate grounds, you may need to access your super early. This is called an early release of super. In these circumstances there are key eligibility requirements that must be met. 

Learn more about early release of super


Tip: Ready to access your super?

If you need to access your super early, or you’re 65 and ready to access your super, we recommend considering your options and seeking out a licensed financial adviser to help you work out what’s best for you.

There are options as to how you withdraw your superannuation. You can withdraw it all as one lump sum, or on a regular basis like a salary (using an account-based pension). 

Can I add more money to my super?

Whether retirement is some time away or it’s on the horizon, additional contributions* to your super could add up to thousands of dollars later. There are several ways to boost your super, including:

  1. Voluntary contributions (after tax)
  2. Salary sacrifice (before tax)
  3. Government co-contributions (after tax), if eligible
  4. Spouse contributions (after tax)

*The government limits how much you can contribute. If you contribute too much, you may have to pay extra tax. Before making additional contributions, please check the age restrictions and work test requirement at rest.com.au/facts

To learn more about contributing to your super, click here.

Your super is invested

Unlike a typical savings account, your super is invested in an investment option ranging from conversative to growth. Most funds allow you to choose how you want your super invested within their investment options available.

When deciding on an investment option, it’s important that you consider your age, values, and investment risk tolerance.

If you are a Rest member, we have an Investment Choice Solutions Tool which can recommend how your money held with Rest should be invested.

Get started today

Here at Rest, we have several different investment options to choose from. You can choose from Core Strategy, Structured Options, Sustainable Growth or Member Tailored Options for more control over how your money is invested.

Check out Rest’s investment options



While there may be some short-term volatility in the market, superannuation is a long-term investment that often goes up and down

How does my super balance grow?

When you or your employer contribute to your super account, that money is invested into assets. Your selected investment option determines the mix of assets that your super is invested in.

When those assets grow in value and produce income, these investment returns grow your super balance.

Over time, your returns can compound. This is because the investment returns you receive each year are then reinvested back into assets. Therefore, each year, you can get a return on the original amount in your balance (this includes any new contributions made that year), as well as on the investment returns of previous years.

Your super doesn’t always earn money – investment returns aren’t the same every year. The market moves through cycles of stability and volatility. Some years the investment returns are lower, and some are higher.

Need a bit more help?

Our team is always here to help you better understand and manage your super. And If you’d like to make sure you’re maximising opportunities and taking the right steps with your super you should check out Rest Advice.

Our team of qualified and professional financial advisers can help you:

  • get your spare money working harder
  • make the right investment choices
  • secure your own and your family’s financial future with the right insurance, if something should happen to you
  • make the right type of super contributions
  • build a plan to make your retirement dreams come true

Learn more about Rest Advice

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