Most backpackers in Australia aren’t thinking about their retirement savings, but the Australian government is. Whether you want to think about it or not, by law any job has to pay into your superannuation (super) fund.
This means you’ll have to sign up for a super fund and understand what it is. When choosing a super fund as a backpacker it can seem pretty confusing, especially if it’s not something you’ve dealt with before. Here I explain everything you need to know about super as a backpacker.
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Fast facts on super for backpackers:
- All employers must pay super, if not you can report them.
- The fine print: you don’t receive super if you’re paid less than A$450 per calendar month or on overtime hours.
- Super must be paid on-time (currently it’s done quarterly), otherwise you can report the employer.
- Super can be returned to backpackers after they leave the country, minus a 65 percent tax.
- Your employer can designate a super fund for you, but you will fill out forms and be aware of this, it’s not automatic.
What is Superannuation?
Superannuation (super) is money separate from your pay cheque for retirement, paid by your employer. Your employer pays it into a specific fund that either you or your employer signs up for. All employers in Australia must pay a minimum of 9.5 percent of your regular hours paid towards super. Overtime pay isn’t part of the regular hours.
It’s called a fund because aside from it funding your retirement, the company holding onto your money may invest it on your behalf. This could lead to having more money for retirement.
This is all great if you’re an Australian resident or citizen, but those travelling through the country and working on the side don’t have the same priorities. Most backpackers don’t care about long-term interest on their super.
What Does Super Guarantee Mean?
For those either working or applying for jobs in Australia, you may notice something called “super guarantee” either on job descriptions, or payslips. Super guarantee means the employer will pay super, either 9.5 percent or possibly more.
The confusing thing about seeing super guarantee on job descriptions is that it could come off they’re doing something over the top. As every employer in Australia legally has to pay super, they’re not doing you a favour by following the law.
Looking for regional work? Check out my tips on finding non-exploitive regional work and the best jobs to complete those 88 days!
How to Choose a Super Fund
Most backpackers shouldn’t be too concerned over which super account to choose as it’s not a long-term decision. Super funds target their marketing towards low-fees, high interest or both. The low-fees should be more concerning towards backpackers as it’s the most immediate cost that effects the funds.
Even if you’re only in Australia temporarily, consider getting an ethical superfund, there’s many options now such as Australian Ethical, Future Super, and CareSuper
All super funds have fees of some sort so it’s best to just sort through the ones with the lowest and less frequently charged fees.
Before getting too distraught in choosing an account, as a backpacker you’ll only take home 35 percent of your total super. This is, when you take the money out once leaving the country. The Australian government keeps the remaining 65 percent as a tax. So, try not to get too attached.
As for fees, the government passed a bill back in 2019 to lower fees. A bonus of this for backpackers is that it helps with low account fees. Any account with a balance less than A$6,000 will have fees capped at 3 percent. Prime Super took this to another level by removing administration fees for accounts with this same balance.
Something else to consider is the type of fund. There’s many types of funds such as industry, self-managed, retail and more. Most backpackers will choose one that is either industry or MySuper. Anyone can join industry funds and they normally have low fees. MySuper is the default account which employers assign if an employee hasn’t nominated a fund for themselves.
Aside from these tips, try to keep just one super fund for your time in Australia. It’s possible to get multiple super accounts if one employer assigns one to you, then you apply for a super fund for another employer. To save from filling out more documents and paying extra fees, it’s better to keep your super in a single fund.
Super Funds with Low Fees
There are hundreds of super funds to choose from, in Australia. There’s no way to research all of them, so it’s better to go to an independent publisher such as SuperGuide. These are SuperGuide’s top three super and pension funds with the lowest fees as of December, 2018. The fees are based on a balance lower than A$50,000 which most backpackers are going to have.
1. Hostplus – Industry Fund – Annual Fees: A$113
2. REST – Industry Fund – Annual Fees: A$118
3. AustralianSuper – Industry Fund – Annual Fees: A$158
How to Sign up for Super as a Backpacker
It’s not difficult to sign up for super. Most big funds you can sign up within 15 minutes, with the right documents. Once you chose a super fund to go with click the sign up and follow the prompts. The basic documents and numbers you need are:
- Contact information in Australia and in your home country including: full mailing address and phone number.
- ABN of the company you’re working for (if applicable)
- Tax file number
- Passport number
- Visa number
Withdrawing Super for Backpackers
Leaving Australia doesn’t mean leaving behind the super you saved up while in the country. Aside from the Australian government taking a 65 percent chunk, the rest is yours to take. This is a departing Australia superannuation payment (DASP).
Most backpackers on Working Holiday Visas fill the eligibility requirements for a DASP, which are:
- You accumulated superannuation while working in Australia on a temporary resident visa (except subclasses 405 and 410)
- Your visa is no longer in effect (it’s either expired or been cancelled)
- You have left Australia
- You are not an Australia or New Zealand citizen or permanent resident of Australia
If you fit these requirements, keep reading. Before filing a DASP, make sure all of your super has been paid to your account(s). If it’s been over six months since departing Australia, your unclaimed super is transferred to the Australia Tax Office and will go through a slightly different channel to claim.
Once you’ve locating your super—either through multiple accounts or the amount is with the the ATO—fill out a DASP online application. This application can be used for claiming super from a fund or an ATO-held super.
Or, use the ATO online services, including the ATO app to claim ATO-held super. This can only be done once linking a myGov account to the ATO. Paper forms are also an option, check on the ATO for which form is best.
For the online form, it’s best to begin filling it out before you’ve left Australia. Although you can’t submit it until after leaving the country and your visa is no longer in effect. This way you may have better access to relevant information in the country.
If your super fund has balance of A$5,000 and over you need certified copies as proof of identification documents. It’s best to have these certified before departing Australia.
Signed up for a super fund? If you haven’t already, check out my guide for choosing a bank account in Australia as a backpacker.
