Superannuation: How Australia's Compulsory Retirement System Works
Superannuation ("super") is Australia's compulsory retirement savings system: employers must contribute a percentage of your qualifying earnings into a super fund of your choice, which then invests on your behalf until you can access it at preservation age.
The Superannuation Guarantee (SG) is the minimum employer contribution, 12% since 1 July 2025 — its legislated final level, with no further increases scheduled. From 1 July 2026 it is calculated on your qualifying earnings (QE), which replaced ordinary time earnings as the SG base under payday super: QE additionally covers commissions, most bonuses relating to ordinary hours and salary-sacrificed amounts, though not overtime. Employers must also now pay each payday rather than quarterly. This is on top of your salary, not deducted from it. Self-employed Australians are not required to pay themselves super, but doing so unlocks the same tax concessions and is one of the most efficient long-term wealth-building tools available.
Super is taxed concessionally: employer contributions and salary-sacrificed amounts ("concessional contributions") attract a flat 15% tax on the way in instead of your marginal rate, and investment earnings inside super are also taxed at 15%. After-tax contributions ("non-concessional") receive no upfront deduction but grow tax-advantaged. The FY2026-27 concessional cap is $32,500/year (up from $30,000, after indexation to average weekly ordinary time earnings); the non-concessional cap is $130,000/year, with bring-forward rules allowing up to $390,000 over three years for under-75s.
You generally cannot access super until you reach preservation age (60 for anyone born after 1 July 1964) and meet a condition of release such as retirement. This long lock-up is what makes super both powerful (decades of compounding at concessional tax rates) and a challenge for FIRE seekers, who often need a bridge portfolio outside super to fund early retirement.
Investment options matter enormously. Most super funds offer a range from conservative (mostly cash and bonds) to high growth (mostly Australian and international shares). Over a 30-year horizon, the difference between a balanced and a high-growth option can be hundreds of thousands of dollars. The default "MySuper" option is designed to be a sensible middle ground but is rarely the best fit for younger members with long horizons.
Fees compound just like returns — a 1% annual fee difference over 40 years can cost a member 25-30% of their final balance. Industry funds (AustralianSuper, Aware, Hostplus, REST, UniSuper) generally have lower fees than retail funds, and low-cost indexed options inside those funds drop fees further. The ATO's YourSuper comparison tool ranks funds by performance and fees and is a useful starting point for choosing or switching.
Richify lets you track your super balance alongside everything else you own — across funds, with current contribution caps applied, so you can see exactly how each extra salary sacrifice or non-concessional contribution moves your retirement number.
