What is a superannuation?

31 views

I’m a 15 (almost 16) year old high school student who is doing commerce as a subject and I have still have no idea what a superannuation is even though we talk a lot about it in class. Plus, a few months ago I got a job and I keep on getting emails from the bank telling me to set up my superannuation which I can’t quite seem to understand. Something about taxes I guess?

In: 2

It’s a form of saving for your retirement.

In Australia (where I live), it’s the law that your employer must pay 10% (soon to increase to 10.5%) of your salary into a superannuation fund, which you cannot withdraw until you retire. The idea is that the money is invested, so when you retire you should have enough money to live on when your regular income from working has stopped.

In reality, it’s a bit more complicated. You can make extra payments yourself (to a certain limit), and can choose how the money is invested, but in general, you can’t touch it until you reach a certain age. Also, as people tend to live longer, the amount of money you get from your super might have to last you a lot longer than originally thought (so it’s good to think about other savings and investments, as well).