superannuation

Superannuation is a long-term savings arrangement intended to fund retirement. It combines compulsory employer contributions with voluntary personal contributions and the funds are invested to grow assets over time. The money is held in a superannuation fund and is generally preserved until retirement, at which point it is accessed to provide income in retirement.

In Australia, where the term is widely used, superannuation is regulated by the Australian Prudential Regulation Authority and the Australian Taxation Office. Funds may be organized as industry funds, retail funds, or self-managed super funds. Most of the current system operates on an accumulation basis, where the value of members' accounts grows with contributions and investment returns; defined-benefit arrangements are less common.

Contributions can be concessional (before-tax) and non-concessional (after-tax) amounts, with limits set by law. Earnings within the fund typically receive concessional tax treatment. When funds are withdrawn after reaching preservation age and satisfying a condition of release (such as retirement), payments may be taxed as income or received tax-free depending on circumstances.

Access rules: The preservation age ranges from 55 to 60 depending on birth year; early access is possible only under specific circumstances such as severe financial hardship or compassionate grounds. Policy tools include minimum employer contribution rates, caps on concessional and non-concessional contributions, portability rules, and the ability to rollover balances between funds on job changes.

Critically, coverage and adequacy remain issues; discussions include the impact of aging populations, investment risk, fees, and the role of self-managed funds. Reforms aim to balance taxpayer support with retention of savings and fund reliability.