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Superannuation Guide

Wage & Pay

14 May 2025 (Last updated 27 Nov 2025)

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Superannuation (often referred to as Super) is a tax-efficient savings fund that’s built up throughout an employee’s career. This leaves workers with a nest-egg that makes life more comfortable once they retire.  

In this guide for employers, we explain superannuation in Australia, what are superannuation rates, eligibility, employer obligations around superannuation, and key things to remember. Please note that advice regarding tax and superannuation is outside of Peninsula’s area of expertise. Any information regarding tax and superannuation provided above is sourced from the ATO. The below information does not constitute legal or financial advice. Peninsula recommends seeking specialist advice or addressing any questions to your accountant, tax specialist or the ATO for further information.

What is Superannuation?

Superannuation is a retirement savings system for Australian workers. Employers are required by law to pay superannuation contributions for their eligible employees. These contributions are paid into a superannuation fund, which is a type of investment account. As an employer you can suggest a superannuation fund or the employee may have their preferred nominated fund to which they have already made contributions to when working in previous jobs.

The money in the fund is invested by the fund manager, and it grows over time. Employees can access their superannuation in Australia when they retire, or earlier under certain circumstances, such as if they become permanently disabled or ill. 

The most common type of contribution to an employee’s super account is likely to be the Superannuation Guarantee (SG). The SG is a part of the remuneration package employees receive from their employer. The amount is a percentage of gross (pre-tax) salary or wages.

Superannuation and NES

Superannuation is an entitlement under the National Employment Standards (NES). This means most employees covered by the NES can take court action under the Fair Work Act to recover unpaid superannuation. The NES entitlement to super aligns with super laws, so if the employer complies with the Superannuation Guarantee, they will meet their obligations under the NES. However, this entitlement may not apply to all employees. Please check your award and contract regarding superannuation.

Employee Eligibility

Generally, all employees are eligible for Super Guarantee.

There are some exceptions to these rules, such as for contractors and employees who are not Australian residents. 

Superannuation Rates

The Superannuation Guarantee rate increased from 11.5% to 12% on 1 July 2025. This means employers must pay 12% of an eligible employee’s ordinary time earnings into their superannuation fund. Ordinary time earnings include salary, wages, bonuses, and commissions. 

Your super contribution obligations may be higher under an agreement, award or common law contract, so it’s important to be informed and stay on top of industry changes.

Ordinary time earnings (OTE) 

Super is payable on all “ordinary time earnings” (OTE), the earnings you pay an employee for their usual hours of work. OTE includes base rates, shift loadings, bonuses, commissions and most allowances. OTE does not include payments for overtime or reimbursement of expenses.

Employer’s responsibilities around Superannuation

Employers have several responsibilities in relation to superannuation, including:

  • Identifying which of their employees are eligible for superannuation. 
  • Calculating and paying the correct amount of superannuation contributions. 
  • Paying superannuation contributions on time. 
  • Choosing a superannuation fund for employees (if they do not already have one or have a preferred option). 
  • Providing employees with information about their superannuation account and any employer contributions.  

Paying superannuation

There are a few different ways employers can pay superannuation. The most common is to pay electronically to the employee’s nominated superannuation fund. Employers can also pay superannuation by cheque or BPAY. 

Employers need to collect information from their employees about their superannuation funds. This includes the fund’s name and ABN, as well as the employee’s membership number. 

Failure to pay superannuation

If an employer doesn’t pay superannuation for their eligible employees, they may be required to pay the superannuation guarantee charge (SGC). The SGC is a tax penalty that is paid to the Australian Taxation Office (ATO). 

The SGC is calculated at a rate of 99% of the unpaid superannuation guarantee contributions. This means that employers who don’t pay superannuation will end up paying more than they would have if they paid the contributions on time. 

To avoid penalties, employers should keep thorough records of super contributions for all employees, along with evidence of the transactions.  

This may also fall under the scope of wage theft, which is the criminalisation of intentional underpayments of certain entitlements.

Superannuation payment timeline

Superannuation contributions need to be made at least four times a year, and this must be within 28 days of the end of each quarter.

Quarter Period Final payment date
1 1 July–30 September 28 October
2 1 October–31 December 28 January
3 1 January–31 March 28 April
4 1 April–30 June 28 July

Employers can choose to pay superannuation more often than this, but they cannot pay less often. If you do not make payments before the final cut-off dates, you are liable for a Superannuation Guarantee Charge (SGC).

Some super funds, awards, and contracts may need you to pay super more regularly than quarterly. Please check your contractual obligations to ensure super contributions are paid on time.

Superannuation Guarantee Charge

The Superannuation Guarantee Charge (SGC) applies when employers don’t pay the minimum amount of super guarantee for their eligible employees to the correct fund by the due date.

Benefits of superannuation for employees

There are several benefits to paying superannuation for employees. These include:

  • It helps employees to save for their retirement. 
  • It can attract and retain good employees. 
  • It can improve employee morale and productivity. 
  • It can reduce the burden on the government in terms of providing retirement income support. 

Benefits of superannuation for employers 

There are also several benefits to paying superannuation for employers. These include:

  • It can help to reduce the risk of being fined for not paying superannuation. 
  • It can help to attract and retain good employees. 
  • It can improve employee morale and productivity. 
  • It can be used as a tax deduction. 

Choosing superannuation funds

Employees are allowed to choose their own superfund or retirement savings account. Employers need to provide employees with a choice of fund form when they start working for you.

Also, employers should have a default fund for employees without a preferred fund. Many awards and agreements already contain default funds. 

There are a wide variety of superannuation funds to choose from in Australia. When selecting a fund, employers should consider the following factors: 

  • The fees and charges associated with the fund. 
  • The investment options available in the fund. 
  • The fund’s performance over time. 
  • The fund’s customer service. 

Employers can also compare superannuation funds using the ATO’s YourSuper tool. 

Types of superannuation funds

There are two main types of superannuation funds in Australia:

  • Retail superannuation funds: Retail funds are typically owned by banks, insurance companies, and other financial institutions. 
  • Industry superannuation funds: Industry funds are owned by their members and typically have lower fees than retail funds. 

Employers can also choose to set up their own self-managed superannuation fund (SMSF). SMSFs are complex and require a lot of time and expertise to manage. 

Superannuation in Australia vs superannuation in New Zealand

Both countries have retirement schemes called ‘superannuation’ or super. However, in New Zealand, superannuation refers to the retirement scheme provided by the government. The equivalent in Australia is the Age Pension.

Superannuation in Australia is where employers and employees make contributions to a retirement savings account during their working life. Its equivalent in New Zealand is the KiwiSaver.

  • Important note: Advice regarding tax and superannuation is outside of Peninsula’s area of expertise. Any information regarding tax and superannuation provided above is sourced from the ATO. The above information does not constitute legal or financial advice. Peninsula recommends seeking specialist Superannuation advice from your accountant, tax specialist or the ATO for further information.

For all other HR and Health & Safety matters, call Peninsula for expert advice 24/7.

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