Many people never actively choose a super fund. An employer picks a default, the account follows you from job to job, and the balance grows for decades with very little attention, so a small difference in fees or investment mix compounds into a large one by retirement. The terms below cover the three things that decide how it turns out: what a fund charges and how it invests, how money gets in and at what rate of tax, and when the law lets it come out.
- Super Guarantee
- The minimum superannuation an employer must pay on top of wages, set at 12% of ordinary time earnings since 1 July 2025. Since 1 July 2026 it has to reach the fund within seven business days of each payday, into the fund the employee has chosen, or their stapled fund.
- Stapled fund
- The existing superannuation account that follows an employee from job to job. Since November 2021 a new employer must pay into it when the employee does not choose a fund, rather than opening a new default account.
- MySuper
- The default superannuation product an employer pays into when an employee has not chosen a fund. Every MySuper product has to meet the same legislated rules and is reported on by APRA each year, which is what makes them comparable to each other.
- Choice product
- Any superannuation product that is not a MySuper product, usually one where the member picks the investment options themselves. Fees and returns are published per option rather than per product, so a Choice product has a range rather than a single figure.
- Industry fund and retail fund
- Two of the main kinds of super fund. An industry fund is run for the benefit of its members, with any profit kept in the fund, and most began serving one industry before opening to anyone. A retail fund is run by a financial company as a commercial business. Both are regulated by APRA under the same rules, and either kind can be cheap or expensive.
- Investment option
- The mix of assets your balance is invested in, usually offered as pre-mixed choices such as growth, balanced or conservative. The labels are not standardised, so one fund’s balanced option can hold far more shares than another’s. The split between growth assets, like shares and property, and defensive assets, like cash and bonds, is what the label is describing.
- Lifecycle product
- A MySuper product that changes how a member is invested as they age, usually moving from growth assets towards defensive ones. Each age stage publishes its own fees and returns, so the product spans a range rather than one figure.
- Administration fee
- The charge for running the fund and your member account, rather than for investing the money. Often part flat dollar amount and part percentage, which is why it weighs far heavier on a small balance.
- Investment fees and costs
- The charge for managing the money itself, taken as a percentage of your balance and already deducted before returns are reported. It includes any performance fee paid to the fund’s managers and applies on top of the administration fee. Transaction costs are disclosed separately.
- Buy-sell spread
- A small cost built into the unit price when money moves into or out of an investment option, covering the fund’s cost of buying and selling assets. It is not an exit fee, and it still applies when you transfer out.
- Net return
- What a superannuation balance actually grew by after investment fees, administration fees and tax were taken out. APRA reports it against a $50,000 balance so the flat part of an administration fee is applied to every product consistently.
- Net investment return
- What a product’s investments earned after investment fees and tax, but before administration fees. It measures the investment side on its own, so it sits higher than the net return for the same product.
- Annual performance test
- A test APRA runs each year on every MySuper product, and on trustee-directed Choice products, comparing returns and fees against a benchmark built from the product’s own investment mix. A product that fails twice in a row cannot accept new members.
- Concessional contributions
- Money paid into super before income tax: your employer’s Super Guarantee, any salary sacrifice, and personal contributions you claim a tax deduction for. The fund taxes them at 15% on the way in. They count towards a yearly cap, and anything over it is taxed at your marginal rate instead.
- Non-concessional contributions
- Money you put into super from income you have already paid tax on, with no deduction claimed, so it is not taxed again on the way in. It has its own yearly cap, higher than the concessional one, and people under 75 can bring forward up to three years of it at once if their total super balance is low enough.
- Salary sacrifice
- An arrangement with your employer to pay part of your pre-tax salary into super instead of to you. It is taxed at 15% in the fund rather than at your income tax rate, and counts towards the concessional cap along with the Super Guarantee. Your employer still has to calculate the Super Guarantee on your salary before the sacrifice.
- Carry-forward contributions
- Unused concessional cap from up to five previous financial years, which can be used to contribute more than the yearly cap in a later year. It is only available if your total super balance was under $500,000 at the end of the previous financial year.
- Division 293 tax
- An extra 15% tax on concessional contributions for people whose income plus concessional contributions is over $250,000 a year, taking the tax on those contributions to 30%. The ATO assesses it after your tax return, and it can be paid from your own money or released from your super.
- Government co-contribution
- A payment of up to $500 a year the government adds to the super of lower and middle income earners who make a personal after-tax contribution. The amount depends on your income and how much you put in, and it is paid automatically once you have lodged your tax return.
- Low Income Super Tax Offset (LISTO)
- A refund into your super of the 15% contributions tax on concessional contributions, currently up to $500 a year, for people whose adjusted taxable income is $37,000 or less. From 1 July 2027 that rises to up to $810 a year, for incomes up to $45,000. The ATO works it out from your tax return and pays it automatically.
- First Home Super Saver Scheme
- A way to save a first home deposit inside super. You make voluntary contributions, up to $15,000 a year and $50,000 in total, then apply to the ATO to release them with an amount for deemed earnings. The released amount is taxed at your marginal rate less a 30% offset.
- Downsizer contribution
- A one-off contribution of up to $300,000 per person from the sale of a home you have owned for at least ten years, available from age 55. It does not count towards either contribution cap, and there is no upper age limit or work test.
- Preservation age
- The age from which super can be paid to you, once you have also retired. For anyone born after 30 June 1964 it is 60, which now covers everyone who has not yet reached it. Before then super is preserved, and is released only in narrow circumstances such as terminal illness or severe financial hardship.
- Condition of release
- The event that allows super to be paid out. The common ones are retiring after preservation age, leaving a job after turning 60, and turning 65, from which point you can reach it whether or not you still work. Others include terminal illness, permanent incapacity and severe financial hardship.
- Transition to retirement
- An income stream drawn from super once you reach preservation age, while you are still working. Between 4% and 10% of the balance has to be taken each year, and it cannot be withdrawn as a lump sum until a full condition of release is met. Earnings inside it are taxed the same as an ordinary super account.
- Account-based pension
- A regular income paid from super after retirement, with the balance staying invested. You set the amount above a legal minimum that rises with age, 4% of the balance a year under 65. Earnings in a retirement pension are tax free, payments are generally tax free from 60, and the amount that can move into one is limited by the transfer balance cap.
- Rollover
- Moving a balance from one superannuation fund to another. It is a transfer between funds rather than a withdrawal, so the money stays inside super and is not taxed as income.
- Lost and ATO-held super
- An account a fund can no longer contact you about, or a small inactive balance the fund has transferred to the Australian Taxation Office. The ATO holds it for you and it shows in your ATO online account.
- Insurance inside super
- Life, total and permanent disability or income protection cover held through a superannuation account, with premiums deducted from the balance. Closing the account ends the cover, and replacing it later depends on your age and health.
- Binding death benefit nomination
- An instruction to your fund about who receives your super if you die. Super is not automatically covered by your will, so without a valid nomination the trustee decides who is paid. Many binding nominations lapse after three years unless renewed, though some funds offer non-lapsing ones.
- Self-managed super fund (SMSF)
- A private super fund with up to six members, all of whom are trustees and personally responsible for running it within the law. It is regulated by the ATO rather than APRA, needs an independent audit every year, and carries fixed running costs that weigh heavily on a small balance.