Superannuation in Australia Explained (FY 2025–26)
Last updated: June 2026
Superannuation (“super”) is Australia’s compulsory retirement savings system. Your employer pays a percentage of your earnings into a super fund on top of your salary, and you can boost it further through salary sacrifice. Here is how it works for FY 2025–26.
The Super Guarantee (12%)
Employers must pay the Super Guarantee — 12% of your ordinary earnings for FY 2025–26 — into your super fund. Importantly, this is paid on top of your salary, not deducted from it, so it does not reduce your take-home pay.
Salary sacrifice into super
You can ask your employer to redirect part of your pre-tax salary into super (“salary sacrifice”). These contributions are taxed at just 15% inside the fund rather than at your marginal rate, which can be a significant saving for higher earners — though they do reduce your take-home pay.
Concessional contribution cap
There is an annual cap on concessional (pre-tax) contributions, including both the Super Guarantee and any salary sacrifice. Exceeding the cap can trigger extra tax, so it is worth checking your total contributions before adding large salary-sacrifice amounts.
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