Pension and Retirement Benefits in Australia

Details on statutory and supplemental offerings.

Updated on March 23rd, 2023

What are the statutory pension benefits? What do they cover?

Retirement benefits in Australia are provided through the Age Pension and a superannuation fund. The superannuation payment that an employer makes is to a private retirement fund, while Age Pension is the government fund. Age Pension is means-tested, and when an employee reaches retirement age, their superannuation fund will be considered in their overall income.

Age Pension

The age pension is a pension scheme available to Australian residents over the age of 66 years and 6 months (increasing to age 67 from July 1, 2023, for those born after December 31, 1956). The Age Pension provides pension payments in old age up to a maximum amount. These pension benefits are subject to an income and assets test that can increase or decrease the entitlement people will receive. 

Superannuation Fund

Employers must make contributions (the rate is currently 10.5% of the employee's salary, and it is set to rise to 11% from July 1, 2023) to an employee’s private retirement fund called “superannuation.” This is a required contribution, and if employees do not select a fund for themselves, the employer may need to request details of a stapled super fund from the Australian Tax Office (ATO). Full-time, part-time, and casual workers all receive superannuation contributions from their employers. There are some employees for which the employer does not have to make superannuation contributions, including:

  • Employees under the age of 18 who work under 30 hours per week
  • Nonresident employees being paid for work done outside of Australia
  • Resident employees paid by nonresident employers for work done outside of Australia
  • Non-Australian executives who hold certain visas or entry permits
  • Employees engaged in domestic or private work for less than 30 hours per week (part-time nanny, housekeeper, etc.)

Employers must make superannuation contributions at least four times each year. Employers who are not compliant and do not make contributions in time will be liable for a tax penalty called the Superannuation Guarantee Charge. Within 28 days of commencing employment, the employer must send a written notification to the employee letting them know about the contribution. An employee’s payslip must detail the amount of superannuation contribution for each period to which the payslip relates, as well as the name of the fund.

For more information on superannuation benefits, please refer to this resource.

What pension benefits do most employers offer?

As the Australian pension system (comprising the means-tested Age Pension and superannuation schemes) is one of the best in terms of adequacy, sustainability, and integrity, most employers follow the statutory requirements.

Can an employer make direct contributions to an employee’s private pension? 

An employer's superannuation contribution goes directly into an employee’s private retirement fund.