What is superannuation? A simple guide for Australian employers

Superannuation is Australia’s compulsory retirement savings system. It's an important part of the payroll process that involves employers paying a set percentage of an employee’s ordinary earnings into a regulated super fund.

Making superannuation payment mistakes can lead to serious Australian Taxation Office (ATO) penalties, disgruntled employees, and even legal consequences.

In this article, we provide a comprehensive answer to the question, ‘What is superannuation?’ and outline your responsibilities as an employer.

Understanding Australia's superannuation system

Superannuation, or ‘super’, helps employees accumulate savings for retirement so that they aren’t totally reliant on the age pension. As an employer, you are central to this system, responsible for making contributions correctly, on time, and to compliant superannuation funds.

Under this system:

• You contribute a defined percentage of an employee’s ordinary earnings into a nominated super fund.

• These funds collect, invest, and manage that money until the employee reaches preservation age (generally between 55 and 60).

The Australian Prudential Regulation Authority (APRA) regulates the majority of big industry and retail super funds you hear about. The ATO regulates smaller self-managed super funds (SMSFs).

The key legislation includes:

• The Superannuation Guarantee (Administration) Act 1992, which mandates employer contributions.

• The Superannuation Industry (Supervision) Act 1993, which sets standards for funds and trustees).

As of 30 June 2025, APRA reported that superannuation funds held around $4.3T in total assets. Of that, about $3T was in APRA-regulated super accounts.

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Employer superannuation responsibilities

As an employer, you play a major role in Australia’s superannuation system. It’s a tightly regulated space. Mistakes can lead to payroll errors or, worse, impact your employees’ future savings.

Below, we outline the key things you need to understand and get right when managing superannuation:

1. Choosing a default super fund

If a new employee doesn’t nominate their own fund, you must make contributions to a default fund.

That default fund must:

• Be APRA-regulated (Australian Prudential Regulation Authority).

• Offer low fees and straightforward features.

• Meet MySuper requirements (meaning it’s simple, cost-effective, and designed for default members).

Before setting up a new account, check whether your new employee already has a stapled super fund through the ATO. If they do, you must pay into that existing super account rather than opening a new one.

Keep in mind that some modern awards also list specific default funds you must offer to employees that fall under that award.

2. Mandatory employer contributions

You must comply with the Superannuation Guarantee (Administration) Act 1992. This requires you to pay a set percentage of each eligible employee’s ordinary time earnings (OTE) into their super fund. This payment is called the Superannuation Guarantee (SG). And from 1 July 2025, the rate is 12%.

3. Salary sacrifice and employee voluntary contributions

Beyond the basic Super Guarantee contributions, you need to manage salary sacrifice arrangements and facilitate additional employee contributions.

4. Accurate reporting and record-keeping

All employer super contributions must go through the ATO’s SuperStream system. Your SuperStream reporting deadlines align with the quarterly contribution due dates (28 Oct, Jan, Apr, Jul).

Once Payday Super begins in 2026, these reporting obligations will move to a per-pay-cycle basis.

Why you need to get superannuation right

Getting super right helps keep your business compliant, your payroll running smoothly, and your team confident that they’re being looked after.

• Stay compliant and avoid penalties: Falling behind or making mistakes can turn into audits, fines, or the SGC. Directors can face personal liability for unpaid super, so it’s worth making sure it's right every time.

• Save time and keep payroll running smoothly: When you manage super properly, you don't need to waste time fixing errors, scrambling over late payments, or reconciling mismatched records. It keeps your pay cycles clean and gives you more time to focus on the parts of the business that drive growth.

• Avoid unnecessary costs: Late or missing superannuation payments do more than frustrate staff. Once the ATO adds interest and admin fees, a small oversight can become pretty costly.

• Build trust with your team: When employees can see their super going in on time, it can build confidence. It shows that you take their future seriously and that they can rely on you to get the details right.

• Attract and keep good people: People notice when an employer does the right thing. Running payroll properly and paying super on time helps you stand out as a business that values its staff.

• Support financial security for your team: Every payment you make helps your employees grow their retirement savings. Getting it right gives them peace of mind, and that confidence tends to flow back into the way they show up at work.

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5 superannuation challenges employers face

Even with the best HR and payroll systems in place, managing super can be challenging. The rules are strict, the deadlines are firm, and mistakes can be expensive. Here are some of the main challenges employers face:

Simplify superannuation with Rippling

Superannuation can be one of the most complex parts of payroll. Between changing contribution rates, strict deadlines, and constant ATO updates, staying compliant is no small feat.

Rippling can do the heavy lifting for you. It automatically calculates super contributions every pay run, helps you send them to the clearing house on time, and updates itself when super rules or rates change.

It also streamlines onboarding by collecting Standard Choice Forms and recording fund details from day one, keeping every payment accurate and audit-ready.

What's more, Rippling combines HR, Payroll, and IT on one platform and a single source of truth. So, it's the only software you need to manage your entire workforce from end to end.

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