What is Superannuation?
Superannuation (super) is Australias compulsory retirement savings system. Your employer must contribute 11.5% of your salary (rising to 12% from July 2025) into a super fund. This money is invested and grows over your working life, becoming available when you retire (currently from age 60 for most people). For Chinese Australians who may not be familiar with this system, understanding super is crucial — its potentially hundreds of thousands of dollars that belongs to you.
Choosing a Super Fund
If you dont choose a super fund, your employer will put you in their default fund — which may not be the best option for you. Key factors to compare:
| Fund Type | Annual Fees | 10yr Return | Best For |
|---|---|---|---|
| AustralianSuper (Industry) | 0.57% ($50k balance) | 9.07% p.a. | Most employees — lowest fees, strong returns |
| Australian Retirement Trust | 0.62% | 8.85% p.a. | Similar to AustralianSuper, good service |
| Hostplus | 0.65% | 9.12% p.a. | Hospitality workers, strong performance |
| UniSuper | 0.43% | 8.94% p.a. | University/education workers, ethical options |
| Retail funds (AMP, Colonial) | 1.0-1.5% | 6-8% p.a. | Avoid — higher fees erode returns significantly |
Why fees matter enormously: A 1% difference in fees on a $500,000 super balance = $5,000 per year. Over 30 years, that difference compounds to $200,000+ less in retirement. Industry funds (AustralianSuper, Hostplus, Australian Retirement Trust) consistently outperform retail funds due to lower fees.
Contribution Strategies
- Salary sacrifice (pre-tax): You can contribute additional money from your pre-tax salary. Taxed at 15% in super (vs your marginal rate of 32.5-45% outside super). Cap: $30,000 per year total (including employer contributions). A person on $100,000 salary sacrificing $10,000/year saves approximately $2,000 in tax annually.
- After-tax contributions: From your take-home pay. Not taxed going in but can earn tax-free returns in super. Cap: $120,000 per year. Useful for topping up if youve maxed salary sacrifice or have a windfall.
- Government co-contribution: If you earn under $58,445 and make after-tax contributions, the government adds up to $500. Free money — always claim this if eligible.
- Spouse contributions: If your spouse earns under $40,000, you can contribute to their super and receive a tax offset of up to $540. Useful for Chinese families where one spouse doesnt work (e.g., caring for children or studying).
- First Home Super Saver Scheme: Withdraw up to $50,000 of voluntary contributions for your first home deposit. Contributions are taxed at 15% (lower than your income tax rate), so this is a tax-effective savings vehicle for your home deposit.
Consolidate Your Super
If youve worked for multiple employers, you probably have multiple super accounts — each charging separate fees. Consolidating into one fund saves fees and makes management easier. Steps:
- Log into myGov and link your ATO account
- Go to Super > Manage my super to see all your super accounts
- Choose your best fund (lowest fees, best returns)
- Click Transfer to move all accounts into one fund
- Check insurance: consolidating may cancel insurance in closed accounts. Review before transferring.
Action Items for Chinese Australians: 1) Check your super balance at myGov — you might have more than you think. 2) Consolidate multiple accounts into one low-fee industry fund. 3) Consider salary sacrificing even $50-100/month — the tax savings compound over decades. 4) Check your insurance within super is adequate. 5) Name your beneficiaries (binding death benefit nomination) so super goes to your intended family members, not default estate distribution which can be complicated for families with members in China.