Superannuation 2 – Maximising your superannuation and understanding regulation

FINANCIAL LITERACY

As of mid-2023, approximately 50% of Australian retirees are funding their own retirement.

This figure was 22% – or one in five retirees – in the year 2000. This is due to several factors but may largely be attributed to the Australian Government’s national superannuation initiative which commenced in 1991.

If you wish to learn more about superannuation, including its regulation, and pick up a few tips on how to manage your super, then read on.

Why should you care?

In short, superannuation is a government-run retirement plan. It is a way of accumulating funds throughout your working life that can support you in your retirement. If you think it isn’t important for you then stop for a moment and consider how those Australians who retire without any superannuation live with less financial security.

Regulatory bodies governing super in Australia

The superannuation sector is highly regulated. All super funds operate under two acts of parliament, namely the Superannuation Industry (Supervision) Act 1993 and the Financial Services Reform Act 2002. In addition, employer contributions made to their employees’ superannuation funds are regulated by the Superannuation Guarantee (Administration) Act 1992.

Three main bodies regulate Australian super funds to ensure they comply with relevant national legislation. These regulatory bodies are the Australian Taxation Office (ATO),Australian Securities and Investments Commission (ASIC) and Australian Prudential Regulation Authority (APRA).

Here is more information about each one.

Australian Taxation Office

The ATO has responsibility for ensuring the correct taxation is applied to all superannuation savings and contributions. It is also responsible for keeping track of lost superannuation accounts. The ATO is also the main regulator of self-managed super funds (SMSFs).

Australian Securities and Investments Commission

ASIC monitors the conduct of super funds and consumer protection. Its role is to protect consumer rights in the financial services sector, including superannuation. It enforces the Corporations Act 2001 which regulates the conduct and disclosure obligations of superannuation trustees to their fund members. It also ensures trustees make investment decisions in a fair and transparent way.

Australian Prudential Regulation Authority

APRA manages the licencing and supervises the operation of regulated superannuation funds (other than SMSFs) in Australia. It reviews each fund’s compliance with the Superannuation Industry (Supervision) Act 1993, ensuring that those funds are prudently managed at all times.

Superannuation rules you should know as an employee

If you’re a member of a super fund, here are some basic rules you should be aware of.

Your employer is legally required to pay you superannuation (this is called the ‘super guarantee’) on your annual earnings. They should pay this at least four times a year. In 2026, this will change and employers will be required to pay super each time they process payroll.

Remember:

  • You’re entitled to super from your employer even if you’re a casual worker.
  • You start accruing superannuation from the first dollar you earn.
  • You’re allowed to choose your own super fund, and you’re not required to join your employer’s ‘preferred fund’.
  • When you change jobs, you’re entitled to keep your existing super fund and are not required to join a new fund. Note that superannuation funds charge fees to administer their funds, so if you’re a member of more than one fund, you will pay administration fees for both funds.
  • You’re allowed to make extra, voluntary contributions to your super if wish to, although there are annual caps on this. (For more information visit the ATO).
  • You’re entitled to change your super fund at any time. This used to be difficult, yet changes in regulation have made it quite simple to move from one super fund to another.
  • Laws around superannuation can change at any time.

It is one thing to see it on your payslips and another for your employer to have actually paid your superannuation. Employees can see the superannuation they are earning on their payslips. Please see our payslips basics blog https://edgesmefinancial.com.au/do-you-understand-your-payslip/.

Assistance with your superannuation

Superannuation is quite complex. If you having trouble understanding it, you’re not alone. The good news is there is plenty of help available to help you understand and manage your superannuation. It is just a question of how much time you wish to dedicate to this.

Managing your own finances over time can be difficult. Visiting a registered financial planner is extremely useful for those people who struggle to understand super and are intimidated by it all.

The government has decided to track the performance of super funds. This started in 2021. See: https://www.apra.gov.au/your-future-your-super-performance-test-2021

There is a list of underperforming super funds that you can look at any time. APRA releases this information every year: https://www.apra.gov.au/news-and-publications/apra-releases-2022-mysuper-performance-test-results

Options for increasing your superannuation include the Super-Rewards initiative. When you shop at your favourite brands through Super Rewards, you will get cash back directly into your super account: https://super-rewards.com/

Note: There will be further blogs on superannuation covering salary sacrifice and other aspects – as it is a complex and constantly-changing landscape.

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