What even is Superannuation?

Every month or so, I would get a letter from my superfund. I would think to myself: This looks important, I’ll have to sort it out… one day. This went on for quite some time until I had a fairly large pile of letters. Letters I’d skimmed and sworn to figure out at some later date.

Yesterday I finally did it!

What is superannuation?

I didn’t really know what superannuation was at the start of University. So this is for anyone who’s in the position I was. Superannuation isn’t a global thing. It’s a system that was introduced by the Australian government to try and have people cover their own costs during retirement.

Basically, when you work, some of your money is put into a superfund. That money is invested by the superfund so that the money that is put in grows. When you retire, you will be able to access your superfund, and will use that money to live on. Once that money is gone you can then apply for the pension.

Why would I even need to think about super?

There are actually a couple of different options you have with your super. For example, my super fund offered different investment options. I could choose a conservative, balanced, or high return option.

There’s also a couple of ways that you can access the money in your super. For example, I've learned there’s a potential option as a first home buyer to use some of your super. 

You can also choose whether or not you pay insurance as part of your super. There was a fee coming out of the money in my super account for a payout if I died. I thought about this, and realised that I don’t actually want to be paying for life insurance with my super. No one relies on me financially at the moment, so I couldn’t really see a reason for it. I’ve taken steps to stop these fees being taken out.

There's actually been a couple of changes to super with the new budget that was released a few weeks ago. The goal of these is to prevent the payment of excessive fees. One example, is that a new super account won't be made with each new employer, but the default is that your old super account will follow you. 

I really think it's important to have some idea of these things that are happening. These were things that I never would have known if I hadn’t spent just a few minutes looking into it. I think it really helps to get on top of these things early in life. So if you have that growing pile of letters like I did, I hope this helps you find the will to tackle them!