Superannuation Percentages in Australia: Understanding Your Retirement Contributions

Superannuation is the cornerstone of retirement planning for Australians, and understanding the percentages involved is essential for building a secure financial future. From employer contributions to personal salary sacrifice arrangements, knowing how super percentages work empowers you to make informed decisions about your retirement savings strategy.

The Super Guarantee: Your Employer's Obligation

The Superannuation Guarantee (SG) is the minimum percentage of your ordinary time earnings that your employer must contribute to your super fund. As of 2025-26, the SG rate stands at 12% of your ordinary time earnings, having progressively increased from 9.5% over recent years. This mandated percentage applies to most employees aged 18 and over, regardless of whether they work full-time, part-time, or casually.

For example, if you earn $80,000 per year in ordinary time earnings, your employer must contribute: $80,000 × 12% = $9,600 annually to your super fund. Use our percentage calculator to quickly determine your expected super contributions based on your salary.

Understanding Ordinary Time Earnings

Super guarantee contributions are calculated on ordinary time earnings (OTE), which includes:

• Base salary and wages
• Commissions
• Shift loadings
• Annual leave and sick leave payments
• Allowances directly related to work duties

Overtime payments are generally excluded from OTE calculations. Understanding what constitutes OTE helps you verify that your employer is contributing the correct amount to your super.

The Maximum Super Contribution Base

There's a quarterly cap on the earnings base for super guarantee calculations. For 2025-26, this maximum super contribution base is approximately $62,500 per quarter, or $250,000 annually. Employers aren't required to pay super on earnings above this threshold, though many choose to do so as an employee benefit.

If you earn above the maximum contribution base, you might consider making additional personal contributions to maintain your retirement savings trajectory.

Salary Sacrifice: Boosting Your Super

Salary sacrifice allows you to direct a portion of your pre-tax salary into super, potentially reducing your taxable income while accelerating your retirement savings. The contributions are taxed at 15% within your super fund, which is typically lower than your marginal tax rate.

Consider this example: If your marginal tax rate is 32.5% and you salary sacrifice $10,000 into super, you save: ($10,000 × 32.5%) - ($10,000 × 15%) = $1,750 in tax. That's a significant benefit for building your retirement nest egg.

Concessional Contribution Caps

The government limits tax-advantaged super contributions through annual caps. For concessional contributions (employer contributions plus salary sacrifice), the cap is $30,000 per financial year. Exceeding this cap means the excess is taxed at your marginal rate plus an excess concessional contributions charge.

It's important to calculate your total concessional contributions, including:

• Super guarantee contributions from all employers
• Salary sacrifice amounts
• Personal contributions you've claimed as a tax deduction

Non-Concessional Contributions

Non-concessional contributions are made from after-tax income. The annual cap for these contributions is $120,000 per financial year. You can bring forward up to three years' worth of contributions ($360,000) if you're under 75, providing flexibility for those with irregular income or lump sums to invest.

These contributions don't receive a tax deduction but grow tax-free within super, making them valuable for building retirement wealth, especially if you've already maximised concessional contributions.

Co-Contribution: Government Matching

Low to middle-income earners may qualify for the government super co-contribution. If you earn below certain thresholds and make personal after-tax contributions to super, the government will contribute up to $500 annually to your super fund.

The maximum co-contribution applies if you contribute $1,000 and earn $45,400 or less. The benefit phases out as income increases, reaching zero at around $60,400. This represents a potential 50% return on your personal contribution—an exceptional rate that's worth leveraging if you're eligible.

Spouse Contributions and Tax Offset

Contributing to your spouse's super can provide tax benefits. If you make contributions to a low-income spouse's super fund, you may claim a tax offset of up to $540 (18% of contributions up to $3,000). Your spouse's income must be below certain thresholds to qualify, typically $40,000 or less for the full offset.

This strategy helps couples balance their super savings and can be particularly valuable when one partner takes time out of the workforce.

Investment Returns: The Percentage That Matters Most

While contribution percentages are important, investment returns within your super fund significantly impact your final balance. Super funds offer various investment options with different risk and return profiles:

• High growth: Targets 5-6% above inflation, higher volatility
• Balanced: Targets 3-4% above inflation, moderate volatility
• Conservative: Targets 1-2% above inflation, lower volatility
• Cash: Returns roughly matching inflation, minimal volatility

The difference between investment options compounds dramatically over decades. A 1% difference in annual returns over 30 years can result in a 20-30% difference in your final super balance.

Calculating Your Super Projections

Understanding how percentages compound over time helps you plan effectively. Consider someone earning $75,000 with 12% super contributions invested in a balanced option returning 7% annually:

• After 10 years: approximately $140,000
• After 20 years: approximately $380,000
• After 30 years: approximately $780,000

Adding just 3% salary sacrifice ($2,250 annually) could increase the 30-year projection by over $200,000. These calculations demonstrate the profound impact of contribution percentages and time in the market.

Fees: The Hidden Percentage

Super fund fees directly reduce your returns. A fund charging 1.5% in fees versus one charging 0.5% will cost you significantly over your working life. On a $500,000 balance, that 1% difference equals $5,000 annually—money that should be compounding for your retirement.

Compare fees carefully and consider whether higher-fee funds deliver correspondingly better returns to justify the cost.

Conclusion

Superannuation percentages—from the 12% super guarantee to salary sacrifice contributions and investment returns—all play crucial roles in building your retirement wealth. By understanding these percentages and how they interact, you can make strategic decisions to optimise your super savings.

Regularly review your super contributions, investment choices, and fees to ensure you're on track for a comfortable retirement. Use our free percentage calculator to model different contribution scenarios and understand how small percentage changes today can make a significant difference to your future financial security.