Australia’s superannuation system is a cornerstone of the nation’s retirement planning, mandating that employers contribute to their employees’ retirement savings. Compulsory superannuation, as we know it today with the Superannuation Guarantee (SG), was introduced in Australia in 1992. The initial SG rate was 3% of an employee’s wages which has gradually increased over time, reaching 11.5% in the current 2024-25 financial year. The SG ensures that every working Australian has access to a super fund, with employers contributing on their behalf. This article provides an overview of how the system operates, upcoming changes effective from 1 July 2025, and the procedures for temporary visa holders to access their superannuation upon leaving Australia.
Who It Applies To
Superannuation, commonly referred to as “super,” is a compulsory retirement savings program in Australia. Employers are required to contribute a percentage of an employee’s earnings into a super fund. This obligation applies to most employees, including temporary residents with work rights, regardless of their visa or tax residency status.
Superannuation Guarantee (SG) Rate Changes: Financial Years 2021–2025
The Superannuation Guarantee rate has been increasing incrementally to enhance retirement savings for Australian workers. Below is a summary of the SG rate changes over the past five years:
| Financial Year | SG Rate (%) |
2021–22 | 10.0 |
| 2022–23 | 10.5 |
| 2023–24 | 11.0 |
| 2024–25 | 11.5 |
| 2025–26 | 12.0 |
These gradual increases are part of a long-term plan to strengthen the retirement income system in Australia.
How It Works
Employers contribute to super funds on behalf of their employees, and these contributions are invested to grow over time. The funds are preserved until the employee reaches a certain age or meets specific conditions of release.
Accessing Superannuation
Access to superannuation funds is generally restricted until certain conditions are met:
- Preservation Age:This is the minimum age at which you can access your super, ranging from 55 to 60, depending on your birth date.
- Retirement: Once you reach your preservation age and retire, you can access your super.
- Turning 65: Regardless of employment status, you can access your super upon reaching 65.
- Transition to Retirement: If you’re still working but have reached your preservation age, you may access a portion of your super under specific conditions.
Early access to super is permitted under limited circumstances, such as:
- severe financial hardship or compassionate grounds
- under the First home super saver scheme – to withdraw voluntary contributions you’ve made to your super
- if you’re a temporary resident and are leaving Australia
- if your super account balance is less than $200 and your employment is terminated, or you have a ‘lost super’ account with a balance less than $200.
Upcoming Changes Effective 1 July 2025
The Australian Government has announced significant changes to the superannuation system, effective from 1 July 2025:
- Increase in Superannuation Guarantee (SG) Rate: The compulsory employer superannuation contribution, known as the Superannuation Guarantee (SG), will rise from 11.5% to 12% of your ordinary time earnings. This means your employer will contribute more to your super fund, boosting your retirement savings.
- * Higher Tax Rate for Large Balances: Earnings on superannuation balances exceeding $3 million will be taxed at 30%, up from the current 15%. This change aims to make the system more equitable by reducing tax concessions for high-balance accounts.
(* It’s important to note that this measure is subject to legislative processes and may be subject to change.)
Superannuation for Temporary Visa Holders
Accumulation of Super
Temporary residents working in Australia may accumulate superannuation contributions from their employers. These contributions are held in a super fund and are subject to the same investment and preservation rules as for Australian residents.
Accessing Super Upon Departure
Temporary residents who have left Australia and whose visa has expired may be eligible to claim their superannuation through the Departing Australia Superannuation Payment (DASP).
Eligibility Criteria:
- You must have been on a temporary visa (excluding subclasses 405 and 410).
- Your visa must have expired or been cancelled.
- You must have departed Australia.
- Locate Your Super: Use the ATO’s online services to find your super accounts.
- Apply for DASP: Submit an application through the ATO’s DASP online system.
- Provide Required Documentation: You may need to provide identification and evidence of your visa status and departure.
Taxation on DASP:
The DASP is subject to withholding tax, which varies depending on the components of your super and your visa subclass. It’s advisable to consult the ATO or a tax professional for detailed information on applicable tax rates.
What does this mean for HR Managers ?
Please note that as of 1 July, you must increase the superannuation contribution for all your visa holders up to 12%.
Prepared by Elgy Koay, CPA
Chief Financial Officer, Visa Executive
