First published on Tuesday, October 22, 2024
Last updated on Tuesday, May 20, 2025
Jump to section
Superannuation, or "super," is a long-term savings system designed to help Australians build funds for retirement. There are several types of superannuation funds, including:
Industry funds
Retail funds
Corporate funds
Self-Managed Super Funds (SMSFs)
Each type offers unique features and benefits to cater to different needs. And as an employer, providing superannuation is more than just a legal requirement; it's essential for supporting employee welfare. Offering it enhances job satisfaction, helps attract and retain top talent, and significantly contributes to employees' financial security.
That’s why we’re going to explore the Australian superannuation system, the benefits of offering it to your employees, and practical steps for setting it up. So, you'll have a clearer understanding of how to effectively manage superannuation in your workplace and support your employees’ financial wellbeing.
Understanding the Australian superannuation system
The Australian superannuation system is a mandatory retirement savings scheme that requires employers to make regular contributions to their employees' super funds. Established in 1992, this system ensures individuals have adequate retirement funds through employer and voluntary contributions.
Contributions are invested over time, typically with earnings taxed at a lower rate, and are preserved until the employee reaches a certain age.
Employers have several key obligations regarding superannuation:
You must contribute at least 11.5% of each eligible employee's Ordinary Time Earnings (OTE)—as of 2024.
Contributions are required for employees aged 18 and over who earn $450 or more (before tax) in a calendar month.
Contributions must be made quarterly.
You have to provide a Standard Choice Form to allow employees to select their super fund.
If employees do not choose, contributions must go to a default fund that meets specific standards.
You must maintain detailed records of contributions for at least five years.
Non-compliance can lead to penalties, including the Superannuation Guarantee Charge (SGC).
Benefits of offering superannuation to employees
There are many benefits to offering superannuation, both for employers and employees. Including:
Attraction and retention of talent
A strong superannuation plan is crucial for attracting and retaining skilled employees. Job seekers often prioritise companies with solid retirement benefits, demonstrating that an employer is invested in their future.
Tax benefits for employers
As an employer, you can benefit financially from offering superannuation. Contributions are usually tax-deductible, helping to lower taxable income and improve cash flow.
Salary sacrifice options also provide tax advantages for both employees and the business.
Employee satisfaction and financial security
A well-structured superannuation plan enhances employee satisfaction and financial security. Knowing you contribute to their retirement gives employees peace of mind, allowing them to focus better on their work, which increases productivity and engagement.
The list of advantages Superannuation provides is not exhausted so here are a few more:
Offers lower fees than other retirement accounts
Has straightforward features and various investment options
It follows employees throughout their careers
They offer early access in cases of permanent incapacity or terminal illness
They ensure a steady income during retirement and may provide government contributions of up to $500 to eligible employees
By offering superannuation, you support your employees' financial wellbeing and create a more attractive workplace.
How to set up superannuation for your employees
Setting up superannuation for your employees involves several key steps. Here's a clear guide to help you navigate this process effectively:
Choose a default super fund
If employees don't select their own super fund, you must have a default fund ready. This fund should be MySuper compliant, offering low-cost, straightforward products that meet government standards.
Research various funds to find one that aligns with your company's values and employee needs—choosing the right superannuation fund is essential for meeting legal requirements and keeping your employees happy.
Register with a super fund
Once you've selected a default fund, register your business with them. This process includes providing essential information, such as your Australian Business Number (ABN) and details about your employees.
Collect employee information
Gather necessary information from employees, including their Tax File Number (TFN), chosen super fund details, and any other required identification. Ensure this data is accurate and securely stored to protect employee privacy.
Set up payroll integration
Ensure your payroll system can handle superannuation contributions. Many payroll software solutions offer automated calculations and payments, reducing the risk of errors.
Choose a system that integrates seamlessly with your selected super fund to simplify the process.
Communicate with employees
Inform your employees about their superannuation rights and the process for choosing or changing their super fund. Clear communication fosters transparency and encourages employees to engage with their superannuation decisions.
Compliance and regulations
Every employer must ensure compliance with superannuation laws and regulations. This involves staying informed about current requirements, such as the Superannuation Guarantee rate and contribution eligibility criteria.
Regularly reviewing your practices and getting advice from employment relation experts, helps avoid potential pitfalls and ensures all employees receive their rightful benefits.
Failure to meet superannuation obligations can result in serious penalties. You may be required to pay the Superannuation Guarantee Charge (SGC), which includes unpaid contributions, interest, and an administration fee.
The Australian Taxation Office (ATO) may also impose penalties for late or inaccurate superannuation payments. Understanding your obligations and keeping up with changes in the law can help you avoid these penalties.
Staying proactive about compliance protects your business from financial repercussions and supports the financial well-being of your employees. By maintaining up-to-date practices, you can foster a positive work environment and ensure that your obligations are met effectively.
How BrightHR can help manage superannuation
Offering superannuation has many advantages. It boosts employee satisfaction, helps retain talent, and keeps you compliant with legal requirements. By prioritising superannuation, you not only support your staff's financial wellbeing but also contribute to the overall success of your business.
That's where BrightHR comes in. We're here to help you navigate the superannuation process with ease. With our 24/7 advice, you can get the support you need anytime you have questions. Our HR document library is packed with valuable resources to help you manage superannuation effectively.
BrightHR can streamline this process by automating key tasks, ensuring compliance while reducing administrative burdens. By making the most of our advanced tools, you can easily track contributions and manage employee data, ultimately leading to improved efficiency and peace of mind.
