By Misha Schubert, Super Members Council Australia CEO
Last updated 15 April 2026
If you’ve recently started working in Australia or are just trying to get your head around what superannuation actually is, then, welcome, you’re in the right place.
We’ll cover where Australia’s superannuation system came from, how it evolved into one of the world’s leading retirement systems, and what it might look like in the future.
On this page:
- What is superannuation?
- When did super start in Australia?
- The evolution of super
- Key principles of superannuation nowadays
- Super Guarantee rates have also changed over time
- How super supports Australia’s retirement system
- Super doesn’t look the same for everyone
- The future of super
- FAQs
What is superannuation?
Super is a savings system for retirement. Over your working life, your employer puts money on top of your wages into a super account, which stays invested until you retire.
Super’s important because the more savings you have invested, the more you have to live on in retirement.
When did super start in Australia?
The introduction of compulsory super to supplement the government-funded Age Pension wasn’t until 1992 under the Superannuation Guarantee.
What was before superannuation?
In the 1970s, most Australians relied on the Age Pension for their retirement. Back then, only 32% of workers had super, and they were mainly public servants and white-collar workers.
The system also had limits. Super tended not to move with you if you changed jobs, and benefits were often tied to staying with the same employer.
Who decided to start the super scheme?
In the 1980s, the Australian Council of Trade Unions (ACTU) began pushing to expand super beyond this small group of workers.
The goal was to give more Australians access to retirement savings, and make sure contributions were managed in funds run for the benefit of members.
When did super become compulsory?
Super became compulsory in 1992, when the superannuation guarantee was introduced.
For the first time, employers were required to contribute a minimum 3% of wages into an employee’s super.
Want to see how Australia’s retirement system compares to the rest of the world?
The evolution of super
Over the years, governments have updated the rules to expand coverage, strengthen protections for members, and improve how the super system operates.
Key milestones
1983
A national plan for super
During the Hawke Government in the 1980s, unions, employers and government worked together on a plan to expand super to more workers.
1998
APRA is established
Following recommendations from the 1997 Wallis Financial System Inquiry, the Australian Prudential Regulation Authority (APRA) is established to oversee banks, insurers and superannuation funds and help keep the financial system stable.
1999
Self-managed super funds are introduced
These allow small business owners and self-employed Australians to set up and manage their own super fund, giving them greater control over how their retirement savings are invested. Self-managed super funds are typically for more sophisticated investors: they generally require a large super balance to make financial sense, are less regulated, and have less access to compensation schemes if you should lose money due to misconduct.
2005
Workers gain more choice
Employees are given greater ability to choose which super fund their employer contributions are paid into.
2013
MySuper is introduced
Simple, low-cost, low-risk default super products are introduced for people who don’t choose a fund. All employer default funds must be MySuper compliant.
2019
Protecting Your Super reforms
New rules are introduced to reduce fees on low balances and protect inactive accounts.
2020
Early access to super during COVID-19
Temporary rules allow Australians to withdraw limited amounts of super to help manage financial hardship during the pandemic. Some in the super sector, including one of SMC’s precursors, criticised the policy, arguing it effectively asked Australians to use money intended for their retirement to cover short-term needs.
2021
Stapling reforms begin
Historically, super accounts were attached to the employer, not the worker. Now they are ‘stapled’ to the worker, meaning your super goes with you when you change jobs. This helps reduce the number of duplicate accounts and fees.
2025
Super Guarantee reaches 12%
Employer contributions increase to 12% of wages, completing a long-planned rise.
Key principles of superannuation
The Australian super system is designed around three key principles that make it one of the world’s leading retirement schemes:
- Universality means all Australian workers build retirement savings.
- Preservation ensures super stays invested until retirement.
- Compulsion guarantees super is paid automatically as a legal right.
Other principles keeping super strong for over 17 million Australians include:
Tax concessions – as a thank you from the government for leaving money in super until retirement, most super contributions and earnings are taxed at a flat rate of 15%, much less than the average national tax rate of 25%.
Default funds – to ensure Australians receive the benefits of super regardless of their financial literacy, workers who do not choose a super fund must still receive employer contributions paid into a named default fund.
MySuper products – all employer default funds must be MySuper compliant. This standardised super option provides a low-cost, low-risk product with a simple fee structure and investment strategy, safeguarding a fair deal for default fund members.
Stapling – historically, super accounts were attached to the employer, not the worker. Today, your existing fund is ‘stapled’ to you so it follows you when you move jobs – reducing the chance of having multiple accounts and fees.
Performance benchmarks – to ensure MySuper products are performing well for its members, they’re required to meet performance benchmarks set by the Australian Prudential Regulation Authority, or face being removed from the market.
Equal representation model – under this model, the boards of many profit-to member super funds (where profits go to members rather than shareholders) comprise an equal number of employer and worker representatives, keeping a focus on the best interests of members.
Super Guarantee rates have also changed over time
The Super Guarantee (SG) is the minimum amount employers must contribute to their employees’ super. There are laws about the amount of super your employer needs to pay.
National superannuation rates have increased from 3% when the modern super system was established in 1992, rising incrementally to 9% by 2002, and then 12% by July 2025.
Super is a powerful way to save for retirement for two main reasons.
- One, because super is taxed concessionally, meaning at a lower rate than other forms of taxable income.
- And two, because super is reinvested, so your balance snowballs over time. This snowball effect (called compounding) is so effective, that up to 75% of your super balance at retirement can come from earnings, rather than employer contributions.
How super supports Australia’s retirement system
Australia’s retirement income system has three pillars.
- The Age Pension
A government payment that provides a safety net for Australians who qualify. - Personal savings and assets
Money you save yourself, including property and investments. - Super
Savings built during your working life through employer and personal contributions.
Together, these three pillars support Australians in retirement.
How much you rely on each one will be different for everyone, depending on your savings, assets and whether you qualify for the Age Pension.
For most Australians, super will play a big role in helping fund life after work.
Super doesn’t look the same for everyone
Today, super is a normal part of working life for most Australians. But building retirement savings can look very different depending on your job, income and life circumstances.
People who take career breaks, work part-time, or earn lower incomes may retire with less super. This can particularly affect women, who, on average, retire with lower super balances than men.
Because of this, governments regularly review the super system to see how it can be improved, so more Australians have the opportunity to build enough savings for retirement.
The future of super
Australia’s super system will continue to evolve as the population ages, people live longer and retirement patterns change. Governments regularly review super rules to make sure the system remains fair, sustainable, and effective for future generations. This includes looking at how much people need to retire comfortably, how the system supports different types of workers, and how super funds are regulated.
You can read more about current policy debates and any upcoming changes to superannuation on our legislative and regulatory affairs page.
FAQs
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Superannuation – what is it?
Super is a compulsory savings system, designed to boost financial security in retirement. National superannuation rates are the minimum amount your employer must put into a super account for you, on top of your wages.
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What are the current super rates?
Today, Australian super rates are 12% of your wage (as at 1 July 2025). This has increased incrementally over the years increasing your super balance.
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Why was super created?
With an ageing population and many Australians relying on the Government Age Pension, super was created to ensure all workers build retirement savings, and to keep spending on the Age Pension sustainable.
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Why is super taxed at a lower rate?
The tax concessions on super are a thank you from the government for being required to leave your savings invested until retirement, and an incentive to save more. Once you reach retirement, you pay no tax on super at all.
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Why are we forced to put money into super?
Before the modern super system was established, only 30% of Australians had retirement savings, and research consistently shows people prioritise short-term over long-term goals. Our super system is a policy response to this problem.
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How much super could I have in retirement?
With current superannuation rates, the average Australian worker retires today with $200,000 in their super account, and in 30 years is likely to have about $500,000 (in today’s dollars). Those are life changing sums.
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Why can’t I access my super before retirement?
Super is purposely designed to build retirement savings. By leaving savings in your account until then (and as Australian super rates rise), your balance is likely to grow – giving you the funds to provide a higher standard of living in retirement.
About the author
Misha Schubert
Super Members Council Australia CEO
Misha’s career has combined deep expertise in public policy debates and policy advocacy, executive leadership, board directorships and governance, Government relations, member and stakeholder engagement, speechwriting, communications, and journalism.
See more about Misha: