Superannuation for New Migrants: How Australia's Retirement System Works
Every employer in Australia must pay an extra 12% of your salary into a retirement fund, by law. Most new migrants accept the default fund and never look at it again — losing tens of thousands over a career. Here's what super actually is, how to pick a good fund, and what happens if you leave.
In this article
What Is Superannuation?
Superannuation (or just “super”) is Australia's mandatory retirement savings system. Your employer must pay an extra 12% of your ordinary earnings on top of your wage, into an investment fund of your choosing. That money is locked away — you can't touch it until your preservation age (60 for everyone born after 1 July 1964) — but it grows tax-effectively for decades.
It's not optional and it's not part of your salary negotiation. If your employment contract says “$90,000 + super,” that means you get $90,000 wages PLUS $10,800 paid into your super fund. If it says “$90,000 inclusive of super,” that means $80,357 wages and $9,643 super.
Super applies regardless of your visa: student, working holiday, 482, partner, permanent. As long as you're an employee earning more than $450/month with a single employer, your employer must pay the SG.
Your Employer's Legal Obligations
By law, every Australian employer must:
- Pay 12% Superannuation Guarantee (SG) on top of your ordinary earnings
- Pay it at least quarterly (most pay it monthly with each payslip cycle)
- Pay into either your chosen fund OR a default fund if you don't pick one
- Show contributions on every payslip
- Report the contributions to the ATO via Single Touch Payroll (STP)
Failing to pay is a serious offence — directors of companies can be personally liable. If your employer “forgets” or never pays, you can lodge an unpaid super complaint with the ATO online and they will investigate.
Always check your super balance every payday for the first 3 months at a new job to confirm contributions are flowing. Log in to your fund app — most show contributions within 1-3 business days of payday.
How Much Will You Accumulate?
Roughly indicative figures for someone starting from $0 super on different salaries (assumes 12% SG, 6.5% average annual returns, no extra contributions):
| Salary | After 5 years | After 10 years | After 20 years | After 30 years |
|---|---|---|---|---|
| $70,000 | ~$48,000 | ~$115,000 | ~$330,000 | ~$700,000 |
| $90,000 | ~$62,000 | ~$148,000 | ~$425,000 | ~$900,000 |
| $120,000 | ~$83,000 | ~$197,000 | ~$565,000 | ~$1.2M |
| $150,000 | ~$103,000 | ~$246,000 | ~$705,000 | ~$1.5M |
These are illustrative only and don't account for inflation, fees, insurance premiums, or salary growth. Use the MoneySmart calculator (linked below) for personalised projections.
Photo by Sandy Millar on Unsplash
Choosing a Super Fund
If you don't actively choose, your employer puts you in a default fund. Sometimes that's fine; often it isn't. The 3 things that matter most when choosing:
1. Fees (the silent killer)
Annual fees of 1.5% vs 0.7% sounds tiny — but compounded over 30 years, the difference is roughly $200,000 less in your retirement balance. Look for total fees under 1% of the balance per year. Most industry funds (AustralianSuper, ART, HESTA, Hostplus) sit at 0.6-1.0%. Many retail/bank funds are 1.5-2.5%.
2. 5-year and 10-year returns
A single year is noise. Compare median returns over 5 and 10 years for the “Balanced” investment option (where 60-70% of new members sit). Top performers consistently deliver 7-8% per year average. Anything significantly under 6% over 10 years is below par.
3. Insurance inside super
Most funds auto-enroll you in life insurance and total & permanent disability cover, paid from your balance. For young, single migrants this can eat $300-800 per year unnecessarily. You can opt out via your fund's online portal — but only if you don't need the cover. If you have a partner or kids dependent on you, keep it.
Use the ATO's YourSuper comparison tool (linked below) to filter all MySuper products by fees and 7-year return. Industry funds usually beat retail funds on both metrics, which is why they manage roughly 60% of all super assets in Australia.
How Super Is Taxed
Super gets a deliberately concessional tax treatment to encourage long-term saving:
- Going in: Employer SG contributions are taxed at 15% on entry (the fund pays this) — much lower than your marginal income tax rate (which can be 30-45%)
- Inside the fund: Investment earnings (interest, dividends, capital gains) are taxed at 15%
- Coming out (after 60): Withdrawals are tax-free
- Coming out (early — DASP for departing migrants): Taxed at 35% if held under a working visa, or 65% if held under a working holiday visa
If you're still figuring out the broader tax picture, our guide to applying for a TFN covers the personal tax fundamentals you need before your first payday — and crucially, you must give your TFN to your super fund (not just your employer) or your contributions will be taxed at the higher 47% rate.
What Happens If You Leave Australia
If you held a permanent visa: super stays preserved until your retirement age, then accessible whether you're in Australia or overseas. You can't take it out early just because you left.
If you held a temporary visa (482, 485, 500 student, working holiday, etc.) and you permanently depart: you can claim a Departing Australia Superannuation Payment (DASP). Apply through the ATO online once your visa has expired or been cancelled and you've left Australia.
DASP is taxed at:
- 35% for taxed elements (most people on 482, 485, 500 visas)
- 65% for working holiday visa (417, 462) holders — designed to discourage WHV workers from cycling back-to-back
- 0% for tax-free components (rare — usually only government co-contributions)
If you leave Australia for a long time but plan to return on a different visa eventually (or don't cancel your old visa), super stays put and continues earning returns. The ATO holds “unclaimed super” for departed temporary residents indefinitely.
Photo by Nick Fewings on Unsplash
Common Mistakes to Avoid
- Accepting the default fund without checking. The default is whatever your employer happens to use — often a high-fee retail fund. 5 minutes on YourSuper can save you $100,000+ over your career.
- Not giving your TFN to your super fund. If the fund doesn't have your TFN, contributions are taxed at 47% instead of 15%.
- Letting multiple accounts pile up. Each new job often creates a new super account by default. 5 jobs = 5 funds = 5 sets of fees + 5 insurance premiums. Consolidate via myGov.
- Paying for insurance you don't need. Default insurance via super is convenient but can cost $300-800/year. Single, no dependents, no debt? Often you can opt out.
- Forgetting to update your beneficiary. Super doesn't automatically go through your will. Nominate a binding beneficiary in your fund portal or your super may end up with someone you didn't intend.
- Cashing out as DASP without thinking. If you might come back to Australia within 5-10 years, leaving super here can be financially better than paying 35-65% DASP tax now.
When you arrive, sorting your super alongside other essentials is much easier — see our guides on applying for a TFN (super fund needs it within 28 days of starting work), your first 30 days in Australia, and how to apply for a Medicare card.
Frequently Asked Questions
What is the superannuation rate in Australia in 2026?
12% — your employer must pay 12% of your ordinary earnings into a super fund on top of your wage. This is mandatory by law for almost every employee earning over $450/month from a single employer.
Do temporary visa holders get superannuation?
Yes — same 12% applies regardless of visa type. The difference is that temporary visa holders can claim their super back as a Departing Australia Superannuation Payment (DASP) when they leave Australia permanently.
How do I choose a super fund?
Use the ATO's YourSuper comparison tool. Filter by fees and 7-year returns. Industry funds (AustralianSuper, ART, HESTA, Hostplus) typically have lower fees than retail funds, with similar or better returns.
How much super will I have after 5 years?
On a $90,000 salary: about $60,000-65,000 after 5 years (12% SG plus average market growth). On $150,000: about $100,000+. The longer you stay, the more compounding works in your favour.
Can I access my super before retirement?
Generally no — preservation age is 60 for everyone born after 1 July 1964. Limited exceptions for terminal illness, severe financial hardship, compassionate grounds, or permanent departure (temporary visa holders only).
What happens to my super if I leave Australia permanently?
Temp visa: claim a DASP — taxed at 35% (most temp visas) or 65% (WHV). Permanent visa: super stays preserved until retirement age regardless of where you live.
Do I have to consolidate multiple super accounts?
You don't have to, but you should — multiple accounts = multiple sets of fees + duplicate insurance. Consolidate via myGov in 5 minutes — can save thousands over a career.
Is super taxed?
Yes, but concessionally: 15% on contributions going in, 15% on investment earnings inside the fund, tax-free withdrawals from age 60. This concessional treatment is why super is the most tax-effective long-term savings vehicle in Australia.
Official Resources
- ATO — Super for individuals and families (ato.gov.au)
- ATO YourSuper comparison tool — compare every MySuper product (ato.gov.au)
- MoneySmart — Grow your super calculator (moneysmart.gov.au)
- ATO — Departing Australia Superannuation Payment (DASP) (ato.gov.au)
- Fair Work — Tax and superannuation (fairwork.gov.au)
- myGov — link your ATO account to manage super (my.gov.au)
If you're also figuring out other Australian financial admin, see our guides on applying for a TFN, getting a Medicare card, and (for partner-visa holders) Centrelink eligibility on the 820 visa.
Bottom line:
Don't accept the default fund. Spend 10 minutes on the ATO YourSuper tool, pick a low-fee high-returning industry fund, give that fund your TFN, and check your balance every payday for the first 3 months. Do that and you're ahead of 80% of Australians.