Superannuation Guarantee: What Every Australian Worker Needs to Know

Superannuation is one of the most important aspects of your employment in Australia, yet many workers don't fully understand how it works or how much they should be receiving. The Superannuation Guarantee (SG) ensures employers contribute to your retirement savings, but knowing your rights and obligations helps you maximise these benefits. This guide covers everything you need to know about super in the 2025-26 financial year.

What is the Superannuation Guarantee?

The Superannuation Guarantee is a government-mandated system requiring employers to contribute a percentage of your earnings to a complying superannuation fund. Introduced in 1992, the SG was designed to ensure Australians accumulate sufficient savings for retirement, reducing reliance on the age pension.

For the 2025-26 financial year, the SG rate is 12% of your ordinary time earnings (OTE). This means for every $100 you earn in regular wages, your employer must contribute an additional $12 to your super fund. This represents the culmination of the gradual increase from 9.5% that began in 2021.

It's crucial to understand that this 12% is in addition to your salary, unless your employment contract specifically states that your salary package includes super. The distinction between "plus super" and "inclusive of super" can mean thousands of dollars difference to your actual earnings.

Who is Entitled to Superannuation?

Almost all employees in Australia are entitled to receive superannuation contributions from their employer. This includes full-time, part-time, and casual workers. Since July 2022, the previous minimum earning threshold of $450 per month was removed, meaning you're entitled to super from the first dollar you earn, regardless of how little you work.

However, some workers may not be eligible for SG contributions. Workers under 18 who work fewer than 30 hours per week are exempt, as are those paid to do domestic work for fewer than 30 hours per week. Certain visa holders and international employees may also have different arrangements.

Contractors and self-employed individuals generally don't receive SG contributions, as they're responsible for their own superannuation arrangements. However, if a contractor is deemed to be working in an employee-like capacity, they may be entitled to super under the ATO's guidelines.

Understanding Ordinary Time Earnings

Super is calculated on your ordinary time earnings, not your total pay. OTE includes your regular salary or wages, shift loadings, commissions, allowances, and bonuses related to your ordinary work hours. However, it typically excludes overtime payments, which can affect your super entitlement if you work significant overtime.

This distinction matters because many workers assume their overtime is included in super calculations. If you regularly work overtime, your super contributions may be lower than you expect. Some employers voluntarily include overtime in their super calculations, but this isn't mandatory under the SG rules.

To see how super affects your take-home pay, try our Australian pay calculator which shows both salary-plus-super and salary-inclusive scenarios.

The Maximum Super Contribution Base

While there's no upper limit on the salary that can be subject to super, there is a maximum super contribution base. For the 2025-26 financial year, this is set at $62,500 per quarter. Employers aren't required to pay SG contributions on earnings above this amount.

This means if you earn more than $250,000 per year, your employer's mandatory super contributions are capped at $30,000 annually (12% of $250,000). Higher earners who wish to contribute more to their super can do so through salary sacrifice or personal contributions, subject to contribution caps.

How Super Contributions are Taxed

When your employer contributes to your super, these contributions are taxed at a concessional rate of 15% within your super fund. This is significantly lower than most workers' marginal tax rates, making super a tax-effective way to save for retirement.

For example, if you're in the 30% tax bracket and receive a $10,000 bonus, you'd pay $3,000 in tax if it went to your bank account. However, if it went directly to your super as an employer contribution, only $1,500 would be taxed. The trade-off is that you can't access these funds until retirement.

High-income earners (those with income plus super contributions exceeding $250,000) may pay an additional 15% tax on their super contributions, known as Division 293 tax. This brings their super contributions tax rate to 30%, which is still lower than the top marginal rate.

Contribution Caps: Understanding the Limits

The government sets annual caps on how much can be contributed to super at the concessional tax rate. For 2025-26, the concessional contributions cap is $30,000 per year. This includes employer contributions (including SG), salary sacrifice contributions, and personal contributions claimed as a tax deduction.

Exceeding this cap means the excess contributions are taxed at your marginal rate rather than 15%, and you may face additional penalties. If you're making additional contributions beyond your employer's SG, it's important to monitor your total contributions to avoid exceeding the cap.

For non-concessional (after-tax) contributions, the cap is $120,000 per year, with the ability to bring forward up to three years of contributions under certain conditions.

Checking Your Super Entitlements

Unfortunately, super underpayment is common in Australia. Studies have found billions of dollars in unpaid super each year. Checking your super fund statements against your payslips helps ensure you're receiving your full entitlements.

Your employer must pay super contributions at least quarterly, by the 28th day following each quarter. Many employers pay super more frequently, often with each pay cycle. Your payslip should show the super contribution amount, and this should match what appears in your super fund account.

You can use the ATO's online services through myGov to see a consolidated view of all your super accounts and check that contributions are being made. If you believe your employer isn't paying the correct super, you can report this to the ATO for investigation.

Super on Top vs Inclusive: Why It Matters

When evaluating a job offer, always clarify whether the salary is "plus super" or "inclusive of super." A $100,000 salary plus super means you receive $100,000 in wages and $12,000 in super contributions. A $100,000 package inclusive of super means your base salary is actually about $89,285, with $10,715 going to super.

This 12% difference significantly impacts your cash in hand and can affect decisions about job offers, especially when comparing roles with different super arrangements. Always compare total packages, not just headline salary figures.

Maximising Your Super for Retirement

While the SG provides a foundation for retirement savings, many Australians will need additional contributions to maintain their desired lifestyle in retirement. Consider strategies like salary sacrifice, spouse contributions, government co-contributions for low-income earners, and personal deductible contributions to boost your super balance.

Starting early makes an enormous difference due to compound interest. Even small additional contributions in your twenties and thirties can result in significantly larger balances at retirement compared to the same contributions made later in your career.

Conclusion

The Superannuation Guarantee is a fundamental part of Australian employment, ensuring workers build retirement savings throughout their careers. Understanding your SG entitlements, checking your contributions, and knowing the difference between super arrangements helps you maximise these benefits.

With the SG now at 12%, a larger portion of your total remuneration is going toward your future. Make sure you're receiving every dollar you're entitled to, and consider whether additional contributions could help you achieve a more comfortable retirement.