Five things you may not know about super

August 2017


From humble beginnings of requiring employers to set aside just 3% of an employee's salary, compulsory super now helps to relieve the financial challenges posed by an ageing population and a pressured Age Pension. In the 25 years since compulsory super was introduced, Australians have collectively saved more than $2.3 trillion in super.

Although Australia is touted as being a world leader in super and an early adopter, the concept of super and the need for people to be financially supported in retirement certainly isn’t new. In fact, the idea of superannuation was first documented in Roman times!1

Here are five things you may not know about super.

Super started in Australia in 1862

Although super became something that almost all working Australians were entitled to in the early 1980s, the first super fund was established in 1862 for employees of the Bank of New South Wales (now Westpac). Many private companies followed, introducing their own schemes.

New South Wales was the first state to introduce the state pension

In 1900, when the weekly wage was £2, NSW introduced a means tested Age Pension of £26 a year, which was funded out of tax revenue. Victoria and Queensland followed soon after.

Compulsory super was introduced to avoid a wage rise

In the mid-1980s trade unions agreed to forego a national 3% pay increase in favour of Award Super. And in 1992 under the Keating Government, the new Superannuation Guarantee (SG) system was introduced to provide super for all Australian employees. For the first time, all employers were required to make prescribed contributions on behalf of their employees to a complying super fund.

Before the SG, super was by no means a right

Although it existed, it was generally considered a reward for long and loyal service with one company and the average Australian wasn’t entitled to it. The arrangements were at the discretion of the employer, which often meant that if an employee left a company or lost their job, they also lost their employer contributions.

Our dependence on super is growing

Most Australians are living longer and having fewer children. This older population means there will be fewer people working and paying taxes to fund the Age Pension compared with growing numbers of retirees. In fact, the government is forecasting that in 40 years we’ll have just 2.4 taxpayers supporting each retiree. This is in contrast to five taxpayers for every retiree today.

Super, and your ability to fund your own retirement, has never been more important.

1Brunt, P.A. “Pay and superannuation in the Roman army’ PBSR 18 (1950), p. 50-71