How to open a superannuation account?

What is superannuation?

Superannuation (super) is a compulsory savings scheme through which a portion of your income is set aside for the years following your retirement. Super is calculated as a percentage of your base salary.

If you’re an Australian worker, your employer is required to make superannuation contributions on your behalf to a super fund of your choosing. These contributions are known as the super guarantee (SG).

The SG is the minimum percentage of your salary that your employer is required to pay into your super fund. In 2022 the SG is 10.5 per cent and is legislated to rise by 0.5 per cent each year, until it reaches 12 per cent in 2025.

Why do you need a superannuation account?

A super account is where your super funds are deposited and held. It’s necessary to have an account if you’re employed in Australia. You may need to open a new super account if you’re starting a new job or switching funds.

How do you open a super account?

Most people open their first superannuation account when they enter into the workforce. This may be as a full-time, part-time or casual employee or as contractor or sole trader (self-employed).

Selecting a super fund

When you sign an employment contract there will often be a box you can tick that directs your employer to designate a super fund to pay your SG contributions. However, most employees can nominate a super fund of their choosing.

According to the ATO, you’re generally eligible to choose a super fund if:

• you’re employed under an award or registered agreement that doesn’t require super support
• you're employed under an enterprise agreement or workplace determination made on or after 1 January 2021
• you’re not employed under any award or registered agreement (including contractors paid principally for their labour)

However, you are not permitted to nominate your own super fund if:

• your super is paid under a state award or registered agreement
• your super is paid under certain workplace agreements made before 1 January 2021 that require super support, including some Australian workplace agreements (AWA)
• you’re a federal or state public sector employee, excluded from super choice by law or regulations
• you’re in a particular type of benefit fund or have already reached a certain level of benefit in that super fund

If you are eligible to select a fund, you may want to compare your options to find the super fund that best suits your needs and investment objectives. You may want to consider features such as:

• account fees and ancillary charges
• investment options and opportunities
• different types of funds available
• past performance - although this is not an indicator of future performance
• customer service
• insurance

In most cases, once you select a super fund you can simply sign up for an account through the fund’s website. There may be alternative options to mail in paperwork and documents or apply over the phone.

Be prepared to provide your nominated super fund with your tax file number (TFN) and other pertinent personal information so that they can receive your super contributions.

You’ll then need to fill out and provide your employer with a superannuation standard choice form. As part of this form, you’ll need to include your employer’s Australian business number (ABN) and your nominated fund's unique superannuation identifier (USI).

Default employer super funds

If you don't choose your own super fund, your employer may contact the Australian Taxation Office (ATO) to request details of an existing super account, if you have one. This is known as a stapled super fund. 

As the name implies, a stapled super fund is linked, or 'stapled', to an individual employee so that when you change jobs, there’s no need to open another super account. This government initiative, introduced in November 2021, is intended to minimise unnecessary fees paid by workers that come as a result of holding multiple super accounts.

If you have not made a choice and you do not have a stapled super fund, your employer can pay your SG contributions to their default fund. You can change your super fund at any time.

Types of super funds available

There are different types of super funds available for Australian employees, each providing individual services and investment options. Selecting the right fund for you may require research and consideration.

MySuper

MySuper funds are a replacement for existing default accounts offered by super funds. Your employer must pay your super contributions into a default MySuper account if you don’t nominate a fund yourself. Different types of funds - such as industry funds and public sector funds - may offer MySuper accounts.

Retail funds

Retail funds are commonly run by banks or investment companies and are available to most employees. These funds typically offer a wide range of investment options. Shareholders receive a percentage of profits.

Industry funds

Some industry funds are restricted to employees within their defined industry. However, larger funds are open to anyone. Unlike retail funds, profits are directed to members, not shareholders.

Public sector funds

Public sector super funds are generally only open to government and government-related employees. These funds tend to operate in a similar way to standard retail or industry super funds but may include exclusive benefits.

Corporate funds

Corporate funds are set up by employers for employees and may have an employer who also operates the fund under a board of trustees. They can also be included as a separate part of a large retail or industry super fund.

Self-managed super funds

A self-managed super fund (SMSF) offers full control over where your money is invested. An SMSF is a private superannuation fund that you manage yourself, and is regulated by the Australian Taxation Office (ATO).

These funds are generally only suitable for people with a thorough understanding of the financial and legal responsibilities of managing a super fund. Set-up and running costs can be expensive, so it’s usually worth the cost only if you have a large balance.

Eligible rollover funds

Eligible rollover funds (ERFs) are holding accounts for lost or inactive members with a low account balance. These funds vary in terms of fees and returns, and can be consolidated with active super funds.

You can learn more about the different types of super funds, in order to better compare your options.

Consolidating your super accounts

Consolidating your super accounts is not a complicated process - it’s the same process you would use if you wanted to switch super funds. You can do this online using the government’s MyGov portal or by filling out a rollover form and sending it to your preferred fund.

The instructional video below, created by the ATO, offers a simple explainer for combining all your super accounts.

Compare super funds