Superannuation, or super for short, was developed in the 1990s as a way of helping Australians to have more money in their retirement years.
It takes a portion of earnings from each pay cheque and puts it into an investment vehicle that can only be accessed during retirement.
In its simplest form, that’s what super is: a compulsory retirement savings plan that takes cash from money earned now and puts it to one side for later in life.
Though it is compulsory to have a super account, people are free to pick where they put their money.
Providers range from huge industry funds that rank among the biggest asset managers in Australia to more focused operations that offer specific services to their customers.
Stockspot Super is planning to be one of the latter, using our experience managing separate accounts in the index investing space to create a home for smart retirement savers.
How does superannuation work in Australia?
It’s not an understatement to say that super is one of the biggest industries in Australia.
Collectively, we have over $3.7 trillion saved in superannuation, making Australia the fifth largest country in the world for private savings.
Back when superannuation in Australia began in 1992, the amount that was taken for the future was 5%, but that has risen over time to 11.5%, where it moved in mid-2024. It will rise further again to 12% in 2025, where it is expected to stay for the foreseeable future.
Most employees never see this money, as it goes directly from their employer to their superannuation provider without ever touching their bank account, though for self-employed people and those with self-managed super funds (SMSF), it is a little more complicated.
Super can’t be withdrawn prior to the age of 60 and can only be otherwise accessed in very specific circumstances, such as part of government home-buying schemes or extreme financial hardship.
What can I do with my super?
Most Australians have more in super than any asset other than their family home and it is guaranteed to have a big impact on how they spend their later years, so it is vital to get it right.
While having a super is compulsory, where you choose to have it is a choice – and one of the key mistakes people make with superannuation is not exercising that choice.
Lots of employers have a super partner, often related to the industry in which they operate, and their employees will default to that fund when they join.
The default funds are not always great returners and don’t always offer great products. However there are fantastic super products out there with strong track records, good transparency and low fees that are likely to offer a better outcome for people saving for their super.
How can I make the most out of my super?
Stockspot has done ten year’s worth of research into super in Australia and has consistently found that there are two things that are most important to get right with super.
The first is making sure that there is an investment mix that suits your age, with older people who are closer to retirement generally preferring a more defensive portfolio and younger people with more time to ride our market fluctuations able to be more aggressive.
The second is to keep fees as low as possible, because while 1% or 2% a year doesn’t sound like much, in the world of superannuation, it could amount to hundreds of thousands over the many years until you reach retirement due to compounding.
Stockspot can assist with both: our diversified portfolio suits SMSF investors to spread their funds across a range of investments that suits where they are on their super journey, and our long-term approach to portfolio management helps to keep fees as low as possible.
That’s what super is all about in Australia: long-term savings and investments, designed to help you get the best out of your retirement. It pays to be sensible, shop around and make smart decisions with your money and your future.
View our portfolios past performance and find out how we can help you reach your long term goals.
Disclaimer: Any advice contained in this blog is general advice only and has been prepared without considering your objectives, financial situation or needs. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate taxation and legal advice.
This information has been prepared by Stockspot Pty Ltd (ABN 87 163 214 319, AFSL No. 536082) (Stockspot). Stockspot is currently developing our superannuation product, which is not yet available for investment. Once the superannuation product is available for investment, a Product Disclosure Statement (PDS) will be made available on this website. You should read the PDS before making any decision.
