What is superannuation?
Superannuation (super) is money set aside, generally over a long period of time, to provide for retirement. Super savings may be supplemented by the government age pension. Depending on the amount of super and other assets a person holds, it may replace the age pension altogether.
In broad terms:
- Super contributions are made to a regulated, complying super fund or retirement savings account (RSA) by
- employers
- members or the member's spouse (or both).
- The contributions are invested on behalf of the member – this money is invested into a broad portfolio including, but not limited to
- shares
- property
- government bonds
- cash deposits.
- Benefits are paid to the member on either
- retirement
- resignation
- death
- a condition of release specified by law.
As an employer, you need to know about super guarantee (SG). This is making super contributions for your eligible employees. The Superannuation Guarantee (Administration) Act 1992External Link defines the way SG works and your obligations as an employer.
Super guarantee employer obligations
As an employer, you play a critical role in paying compulsory super for your employees. SG is the minimum super you must pay each quarter for each eligible employee.
You'll need to pay SG contributions to the super funds of all eligible employees, regardless of how much they are paid.
The minimum SG contribution is the employee's ordinary time earnings (OTE) multiplied by the current super guarantee rate. It is important to understand what OTE is and what it includes. For example, it doesn't include any employee overtime payments if the employees' ordinary hours of work are clearly identified.
If you're an employer with eligible employees, you must:
- pay SG at least 4 times a year by the quarterly due dates to avoid the super guarantee charge (SGC)
- pay and report the SG electronically in a standard format, ensuring you meet SuperStream requirements.
SuperStream is the data standard employers must use to report and pay their compulsory employee super contributions to super funds.
Your super payments must be made to a complying super fund or retirement savings account (RSA) by the due date. Most employees can choose their own fund.
If you don't pay the super on time, you must complete and lodge a Superannuation guarantee charge statement and pay the SGC to the ATO.
Summary of Module 1
Remember:
- the minimum super guarantee contribution is an amount calculated by multiplying the employee's ordinary time earnings by the current super guarantee rate and must be paid at least 4 times per year.
- employers must pay the super guarantee charge if they don't provide the minimum super guarantee for their eligible workers.
Return to Super guarantee employer obligations – online course.
Continue to Module 2: Working out if you have to pay super.