Superannuation in Australia
Superannuation is Australia's mandatory retirement savings system, introduced to ensure workers have funds for retirement. Unlike some countries where retirement savings are optional, Australian employers are legally required to contribute to their employees' super funds.
Employer contributions
- Minimum 11.5% of OTE (2024-25)
- Paid to employee's super fund
- On top of wages, not deducted
- Paid at least quarterly
Employee benefits
- Tax-advantaged savings
- Compound growth over career
- Choice of super fund
- Can make additional contributions
Super is separate from gross pay—it's an additional cost for employers. When advertising salaries, be clear whether the figure is "plus super" or a "package" (including super).
How super guarantee works
The super guarantee is the minimum percentage employers must contribute. It's calculated on ordinary time earnings (OTE), which includes most regular payments but excludes overtime.
What counts as OTE for super
For example, if an employee earns $5,000 OTE in a month, the minimum super contribution is $5,000 × 11.5% = $575. This is paid to the employee's nominated super fund on top of their wages.
Super guarantee rate increases
The super guarantee rate is legislated to increase gradually:
- 2024-25: 11.5%
- 2025-26 onwards: 12% (final rate)
Employers must update their payroll systems each 1 July to apply the new rate. Failing to do so results in underpayment and potential SGC penalties.
Super payment deadlines
Super must be received by the employee's super fund by the quarterly due date —not just sent. Allow 2-3 business days for electronic transfers. If super isn't received by the due date, the Super Guarantee Charge applies, which cannot be claimed as a tax deduction.
Employee super choice
Employees have the right to choose which super fund receives their contributions. Employers must provide a Standard Choice Form to new employees within 28 days of starting.
If employee chooses a fund
- Pay super to their nominated fund
- Employee provides fund details and member number
- Can change fund at any time
If no choice is made
- Check for "stapled super fund" via ATO
- If no stapled fund, use employer's default fund
- Default fund must be a complying fund
Common super mistakes
Late super payments
Missing quarterly deadlines triggers the Super Guarantee Charge, which includes interest and a $20 per employee admin fee. It's also not tax deductible.
Including super in salary packages incorrectly
Advertising a "$65,000 package including super" is fine, but be clear about it. The base salary would be ~$58,300 with 11.5% super on top.
Not checking for stapled super funds
Since November 2021, employers must check the ATO for an employee's "stapled" super fund if they don't make a choice. Ignoring this can lead to compliance issues.
Using wrong OTE calculations
Including overtime in super calculations over-pays; excluding paid leave under-pays. Get the OTE definition right to ensure correct contributions.
Key takeaways
Superannuation is a mandatory employer contribution to employee retirement savings in Australia. Currently at 11.5% of ordinary time earnings (rising to 12% from July 2025), super must be paid at least quarterly to avoid penalties. It's paid on top of wages, not deducted from them.
Accurate super calculations start with correctly identifying ordinary time earnings from your time and attendance data. RosterElf's payroll integration helps ensure hours are classified correctly for seamless export to payroll systems that calculate and remit super contributions.
