By Aaron Barcham
How the super system works
Summary
Superannuation, or super, is how Australians save for retirement. Your employer must pay 12% of your salary into a super fund, where the money is invested until you can access it, usually when you retire. Since 1 July 2026, your employer has to pay it each time you're paid.
What is superannuation?
Super is money set aside during your working life so you have an income when you stop working. Most of it comes from your employer, who is required by law to contribute on your behalf under the Superannuation Guarantee (Administration) Act 1992. You can add to it yourself, and then the government adds a top-up for some people on lower incomes.
Your super sits in a fund that invests it for the long term, in assets such as shares, property and cash, depending on the investment option you choose. Because you generally can't access it until later in life, it has decades to grow. In retirement, your super savings are generally used to provide you with an ongoing income, together with the Age Pension (if you are eligible) and any other savings you have.
If you want the step-by-step version, our guide to how superannuation works follows one account from first contribution to retirement.
Superannuation in Australia: the key numbers for 2026–27
These are the rules that apply for the 2026–27 financial year. Most are indexed and reviewed on 1 July each year.
Super Guarantee rate
12% of salary
The minimum your employer must pay into your super.
Concessional contributions cap
$32,500
Before-tax contributions, including your employer's, taxed at 15% in the fund.
Non-concessional contributions cap
$130,000
After-tax contributions, if your total super balance at 30 June 2026 was below $2.1 million.
Preservation age
60
For anyone born on or after 1 July 1964, this is the minimum age at which you can access your superannuation.
Transfer balance cap
$2.1 million
The general limit on how much you can move into retirement-phase pensions.
Maximum contributions base
$270,830
This is the maximum amount of an employee's qualifying earnings. Your employer doesn't have to pay the Super Guarantee on earnings above this.
Division 293 threshold
$250,000
Above this income, an extra 15% tax applies to some or all concessional contributions that are made into your super.
Low income super tax offset
Up to $500
Paid into your super if your adjusted taxable income is $37,000 or less.
Government co-contribution
Up to $500.
If you are a low or middle income earner and make a personal after tax contribution, the government may add extra money to your super. Eligibility thresholds and contribution limits can change each financial year. See the ATO website for current rates and thresholds.
Payday Super
From 1 July 2026
Employer super is paid with your wages, not quarterly
For everything that changed on 1 July 2026, see our summary of key super and tax changes for 2026–27.
How money gets into your super
The Super Guarantee is 12% of your qualifying earnings, like your salary and bonuses, and it's paid on top of your wages or salary, not taken out of them. Your employer must pay it if you're 18 or over, and also if you're under 18 and work more than 30 hours a week. Some awards and enterprise agreements set a higher rate. Money reaches your super account from three sources.
- From your employer. With every pay under Payday Super, your employer pays your super when they pay your salary, instead of every quarter. The money must reach your fund within 7 business days of payday. That means your contributions reach your super sooner.
- From you. You can make super contributions of your own. Before-tax (concessional) contributions, such as salary sacrifice, count towards the $32,500 cap together with your employer's payments. After-tax (non-concessional) contributions come out of money you've already paid tax on. They count towards the separate $130,000 cap.
- From the government. If your adjusted taxable income is $37,000 or less, the Low income super tax offset pays 15% of your concessional contributions[WT1.1][AB1.2] back into your super, up to $500 a year.
- Government Super Co-Contributions. If you are a low or middle income earner and make a personal after tax contribution, the government may add extra money to your super. Eligibility thresholds and contribution limits can change each financial year. See the ATO website for current rates and thresholds.
Compare Colonial First State
See how we compare for fees, performance, investment choice, and support.
How super is taxed
Concessional contributions, which include your employer's super payments and any salary sacrifice, are taxed at 15% when they reach your fund. If your income and certain before-tax super contributions total more than $250,000, you may pay an extra 15% tax on some of these contributions.
When you retire, you can move your super into a pension to provide a regular income, or by taking some or all of your super as a lump sum. From age 60, these pension payments are generally tax free if they come from a taxed super fund. Different tax rules may apply before age 60.
When you can access your super
Super is preserved, which means it stays in the fund until you meet a condition of release. For anyone born on or after 1 July 1964, the preservation age is 60. Once you reach it and retire, you can generally access your super. When you turn 65, you can access it at any time, whether you're still working or not.
Early access is possible only in limited circumstances. Our article on when you can access your super covers every condition of release in detail.
Types of super funds
There are five main types of super fund in Australia: industry, retail, public sector, corporate and self-managed super funds (SMSFs). They differ in who runs them, what they cost, how much investment choice you have and how much responsibility sits with you. Our guide to types of super funds compares them side by side.
Who regulates super in Australia
Three regulators share the job. The Australian Prudential Regulation Authority (APRA) supervises super funds under the Superannuation Industry (Supervision) Act. The Australian Securities and Investments Commission (ASIC) regulates how trustees behave and what they tell members. The Australian Taxation Office (ATO) is the main regulator of self-managed super funds.
How big is Australia's super system
Australians held $4.8 trillion in super at 30 June 2026, according to APRA. Of that, $3.4 trillion was in APRA-regulated funds and $1,107.2 billion was in self-managed super funds. Funds with more than six members received $236.3 billion in contributions in the year to June 2026.
Taking the next step with your super
Understanding the system is one thing. Knowing how your own super is tracking is another.
A Super Health Check can show where you stand in under 10 minutes, at no extra cost. If you'd like personal advice on your CFS FirstChoice super account, Super Advice connects you with a qualified CFS adviser at no extra cost. And if you have super in more than one fund, consolidating may mean one set of fees instead of several, and one balance to track.
FirstChoice Wholesale Personal Super brings 200+ investment options from 70+ Australian and global investment managers together in one account.
Everything starts with a good conversation
As part of our Ask an adviser series, Senior Financial Advisor at Viridian Advisory, Anuja Gupta, answers the question: What would you say to people who might be hesitant about getting advice?
Advice options for every stage of life.
Together in one place.
Frequently asked questions
Yes. The Super Guarantee rate is 12% of your salary for 2026–27. That's the minimum your employer must pay; some awards and enterprise agreements set a higher rate.
No. The Super Guarantee is paid in addition to your wages or salary. You can choose to put part of your pay into super through salary sacrifice, but that's your decision, not a deduction your employer makes.
No. Super is the money you save during your working life. A pension is a regular income: either the Age Pension, paid by the government to eligible people, or a retirement income stream you can start with your own super once you retire.
Generally only once you meet a condition of release. For most people that means reaching your preservation age of 60 and retiring, or turning 65. Early access is allowed only in limited circumstances.
$4.8 trillion at 30 June 2026, according to APRA. Of that, $3.4 trillion was in APRA-regulated funds.
They can, but your super doesn't automatically form part of your estate, so your will alone may not decide who receives it. Your fund's trustee pays it out, and a beneficiary nomination tells the trustee who you want it to go to. You can nominate a beneficiary online.
There's no single fund that suits everyone. The right fund for you depends on its fees, long-term performance, investment options and insurance, and on how hands-on you want to be. Our guide on how to choose a super fund covers what to compare.
Related articles
ASIC warns self-managed super funds may leave many retirees worse off
Super Advice by CFS Advice Services: AIL has appointed CFS Advice Services Pty Ltd ABN 52 682 119 651, AFSL 564571 (CFSAS) to provide one-off limited personal advice on specified topics to members of FirstChoice Superannuation Trust who access the Super Advice service. AIL and CFSAS are both members of the Colonial First State group of companies. CFSAS holds a financial services licence to provide personal financial product advice, and its financial advisers act under this licence when providing advice services to members. CFSAS is responsible for financial advice provided to you under the Super Advice service. Before you receive a financial service from CFSAS, you should read the Financial Services Guide (FSG) issued by CFSAS. The cost of providing the Super Advice service is collectively charged to all members of the Fund and is incorporated in the fees and costs shown in the PDS.
Disclaimer
Avanteos Investments Limited ABN 20 096 259 979, AFSL 245531 (AIL) is the trustee of the Colonial First State FirstChoice Superannuation Trust ABN 26 458 298 557 and issuer of FirstChoice range of super and pension products. Colonial First State Investments Limited ABN 98 002 348 352, AFSL 232468 (CFSIL) is the responsible entity and issuer of products made available under FirstChoice Investments and FirstChoice Wholesale Investments.
Information on this webpage is provided by AIL and CFSIL. It may include general advice but does not consider your individual objectives, financial situation, needs or tax circumstances. You can find the target market determinations (TMD) for our financial products at https://www.cfs.com.au/tmd which include a description of who a financial product might suit. You should read the relevant Product Disclosure Statement (PDS) and Financial Services Guide (FSG) carefully, assess whether the information is appropriate for you, and consider talking to a financial adviser before making an investment decision. You can get the PDS and FSG at www.cfs.com.au or by calling us on 13 13 36.