How Superannuation (Super) Works

A few people online claimed that millions in super are just a myth people use to bash boomers. To refute these claims and prove that millions in super are real I will now explain how super works and why even if you personally do not have any, millions in super are not a myth.

Overall superannuation is a simple system. After a person is hired for a full-time job, a super account is created for them in one of super funds. Afterwards every time they are paid salary a certain sum called 'super sacrifice' on a payslip is deposited into their super account. 

If you worked in formal full-time employment for a single employer all your life, and absolute majority of boomers did just that, it is very easy to accumulate millions of dollars in superannuation. The money will become available to spend only after the retirement but in some exceptional cases one can claim some of it early.

Now that we covered the most typical and simple case, I will outline possible complications. If at any time you switched employer, unless you get out of the way to transfer your super to new super fund, chances are your new employer created you a new super account and because of that your super is split between two different accounts likely with two different super funds. Altogether there still should be millions between two of these accounts, just more hassle and paperwork to collect it all. That is you will not have double amount, both of your accounts together will hold as much money as a single account of someone who worked for the same employer.

Of course, the often you switched jobs and employers, the fractured your super is, split between multiple super accounts all across the industry. So, if you went between couple of dozen employers, collecting all your super could easily turn into a sort of pirate treasure hunt or a detective story. A some long defunct pre dot com bubble company where you worked 30 years ago, would have super accounts in long defunct super fund, so it would be a challenge worthy of Sherlock Holmes to track down where your super ended up after all these acquisitions and mergers. And after all that you will also have to get out of your way to prove you actually worked there as records could be missing and such. Multiply that by all the places you worked and tracking super will easily become a full-time job in itself. To make matters worse you are not tracking 20 separate treasures but only a single one, split into multiple parts. For some jobs it will not even be worth it as if you only worked there a few month, you would have but a token amount of super in their particular superfund. Iron rule of super is the longer you worked in the same place the more super you will have, while every employer you had only adds more hassle to tracking all down. A clear loyalty insensitive here.

If you wondered if it could get any worse, then it can. If your job was classified as part-time, casual, or you were employed under a contract instead of employment agreement, or had not formal agreement at all, then you will have no super at all. Yes, it's possible to miss on super altogether. It's an equivalent of pulling a single short straw. This is particularly a problem for young people as well as for those who switched employers after Financial Crisis of 2008 as after crisis companies started to 'save money' by reclassifying their formerly full-time jobs as part-time or casual. I once seen job ad calling their job 'super casual' which in lay term means as much work and commitment as full-time work but without all the benefits a formal full-time employee will be entitled to. Is it a bad deal for an employee, of course it is. It might actually be illegal too, one can even apply for a court hearing on the matter, but it would probably better to consult with ombudsman first. (This is not a legal advice as I have no formal legal qualification).

You also do not get any super if you run your own business. In fact, in this case, it will be up to you to pay super to your employees. This law is the reason why right-wing business owners while about regulations as they would very much prefer to underpay their employees, but laws do not allow for it and courts can order an employer to pay former employees years of underpaid salaries, if violation is exposed.

Finally, if you worked overseas then, for your overseas employment, overseas rules apply. Superannuation is Australian system that applies only withing Australian jurisdiction. Other countries may have similar systems, for example the US has 401k, but in order to claim anything from this system you have deal with their equivalent of super funds and follow their rules. Not all counties have equivalent systems so if does not exist where you worked, tough luck. To make matters worse, if that country suffered from hyperinflation like post-Soviet states in late 80s early 90s, it might turn their equivalent super into mere pennies.

Super is an accumulated amount rather than flat entitlement like say aged pension that is paid for everyone eligible. If you did not accumulate any super when you had the chance, there is nothing you can do now. That said boomers with millions in super still get aged pension on top of their super and that aged pension is higher than unemployed benefits or disability support pension. Very unfair if you ask me.

If you analyse the system, you can notice that under its rules mediocre and loyal clearly have advantage. Someone who stuck with the same employer all their live had an easy retirement with no hassles in claiming their super. Meanwhile someone who chased their dreams, took opportunities and switched careers will have much harder time. Yet worse is someone who took unconventional path of foreign or self-employment, as they got nothing at all.

Because of that this system is also a boon to all sorts of swindlers and con artists. As under such system the least smart and talented have most of the money. Kakistocracy if you like. Such people are easy targets for all sorts of con artists; thus conmen flourish in this era as much as lifetime employees.

Finally, if you wondered if you can still jump on this bandwagon and benefit from this system, the answer is no. Nowadays most companies use all sorts of tricks to avoid paying you super. Thus, no matter how hard you work, you will not have the same luxurious retirement the boomers currently enjoy. Unlike the boomers' time, this is era of smart people, if you are too dumb to make sure your employment agreement entitles you to all the good things, your company will gladly avoid giving any.