Summarise with AI
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 12% of OTE
- Paid to employee's super fund
- On top of wages, not deducted
- Paid with each pay run
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 × 12% = $600. This is paid to the employee's nominated super fund on top of their wages.
Payday Super changes from 1 July 2026
From 1 July 2026, employers must pay super contributions with each payroll run — received by the fund within 7 business days of payday — replacing the quarterly payment schedule. See the Payday Super glossary entry for a full explanation, or use the free Payday Super cash flow calculator to estimate the impact on your business.
Super guarantee rate increases
The super guarantee reached its final legislated rate on 1 July 2025. The last two steps were:
- 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 within 7 business days of payday under Payday Super —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 the Payday Super deadline (received by the fund within 7 business days of payday) triggers the Super Guarantee Charge: the shortfall, notional earnings at the general interest charge rate, and an administrative uplift of up to 60%. For paydays from 1 July 2026 the charge is tax deductible, but it still costs far more than paying on time.
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 ~$58,035 with 12% 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. At 12% of ordinary time earnings since 1 July 2025, super must be paid with each pay run under Payday Super (since 1 July 2026) 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.
