What you should know

• The government provided pension

  The Australian government age pension is a means tested pension available to retired Australians who meet the Government’s eligibility criteria. Its role is to prevent people in retirement from living in poverty.

  Around 65% of older Australians rely on a government pension or allowance as their main source of personal income at retirement. To qualify for the age pension individuals must satisfy age and residency requirements in particular be an Australian resident and in Australia on the day they apply for the age pension.

  An individuals’ eligibility for the age pension is calculated by taking into account how much income they receive (the income test) and how much their assets are worth (the assets test). The test that results in the lower pension rate will be the one that is paid.

• Compulsory savings and contributions

  All employers must make superannuation contributions of 12% per annum from 1 July 2025 of each employee’s (subject to some exceptions) ordinary times earnings. The contributions are paid directly to each employee’s nominated super fund, or a default fund on their behalf. Superannuation Guarantee (SG) is the official term for compulsory superannuation contributions made by employers on behalf of their employees.

  Individuals are entitled to super guarantee contributions from an employer if they are:

  • 18 years old or over
  • if under 18 years they need to work 30 hours or more per week.

  It does not matter if they are full time, part time or casual, or temporary resident of Australia – they are still covered by superannuation entitlements.

• Voluntary savings

  Voluntary savings through superannuation

  A part of the third pillar of the Australian retirement system is voluntary savings by individuals through either superannuation contributions made in addition to the employer SG contributions (detailed above).

  Voluntary contributions into superannuation are encouraged through a variety of tax concessions provided to superannuation funds and potentially the contributors.

  Voluntary savings through other sources

  Another part of the third pillar of the Australian retirement system is through voluntary savings outside of superannuation. The investments will either be held personally or via an entity such as a company or trust.