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How did superannuation start in Australia?

Nationwide Super
01 June 2018 3 minute readShare
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Promoted by Nationwide Super.

Superannuation in Australia is a big deal for many of us – for good reason.

The Association of Superannuation Funds of Australia recently put the value of superannuation assets at $2.6 trillion.

While superannuation experts agree this is an impressive number, what is in many ways more significant, is the role superannuation plays in the lives of everyday Australians. 

Whether you’re managing your own super or small business super for your employees, you’re part of an industry with a long and rich history.

You may have heard that super was something brought into the workplace in the 1990s, and there is some truth in this.

During that period there were extensive reforms to super, but the genesis of superannuation in Australia dates as far back as Federation.

Superannuation in Australia

Australia’s current retirement income system is made up of three main components:

  • The social security Age Pension.
  • Compulsory superannuation contributions under the Superannuation Guarantee regime
  • Additional savings, such as extra superannuation contributions.

Leading up to now, there have been significant events and reforms, which all contributed to the superannuation and retirement income system we currently know.

The Early 1900s

From 1900 to around 1920 there were several key events that transformed the retirement income landscape.

At the turn of the 20th century, NSW introduced a means tested age pension, which was funded out of general revenue. Other states soon followed.

The Invalid and Old Age Pensions Act was passed in 1908, which determined the eligibility criteria and pension rates – £26 year (10/- a week).

Prior to this, Australians without an employer paid pension or benefits, which was the vast majority of workers, had to fund their own retirement.

In 1915 the Income Tax Assessment Act 1915 was introduced to offer tax deductibility for employer contributions made on behalf of employees, and for the exemption of superannuation fund earnings from taxation.

1920s - 1960s

During this time there were attempts to introduce a comprehensive national insurance scheme for retirement, sickness or disability, but they failed.

By the late 1960s around 70% of age-qualified Australians received the pension, but there was no form of guaranteed superannuation.

1970s – 1980s

In 1973 the Whitlam Government established the National Superannuation Committee of Inquiry, and the following year the Australian Bureau of Statistics conducted the first national survey of superannuation. This study found:

  • Only 32% of the workforce was covered by superannuation.
  • More than twice the number of workers with super were male.
  • 24% of people in the private sector had super, while 58% of employees in the public sector were covered.

In 1976, the inquiry into superannuation recommended a partial national contributory scheme but the government decided against it.

Some of the biggest changes came in the 1980s with the Hawke Government expressing support for the principles of employee superannuation.

Then in 1984, a building industry superannuation fund was formed – the brainchild of building union leaders and Australian Council of Trade Unions (ACTU) officials.

The scheme was considered first of its kind, with funds owned and controlled by a board made up of equal numbers of employer and employee, or union, representatives. Similar industry funds followed shortly after.

A few years later, after challenges managing wage increases, Labor and the ACTU sought a universal 3% superannuation contribution by employers to be paid into an industry fund – it was in lieu of a wage rise.

By the late eighties, 51.3% of employees were covered by super, rising to 64% by 1990.

The value of superannuation funds’ total assets rose from $41.1 billion in 1987 to $119 billion just two years later.

1990 onwards

The modern superannuation system essentially came to being in 1991 with the introduction of the Superannuation Guarantee – a compulsory contribution system, paid for employees by employers.

By June 2003, superannuation assets had grown to $546.8 billion – 65.2% of GDP – and 90% of people employed were covered.

The Superannuation Guarantee rate also increased from 3% to 9%, and then 9.5%.

Superannuation in Australia today

While there have been many other reforms to the retirement income system in recent years, especially in the area of taxation and super co-contributions, the core principles of the superannuation guarantee remain unchanged.

We’ve come a long way since the beginning of last century, but many people continue to look at how they manage their super.

If you’re not sure about your personal superannuation or small business super, you may wish to speak to superannuation experts.


This article has been prepared by a third party, on behalf of NSF Nominees Pty Limited (ABN 29 053 228 667 AFSL 253129), trustee of Nationwide Superannuation Fund (Nationwide Super) (ABN 15 201 768 813), for information purposes only. It does not take into account your objectives, financial situation or needs. You should consider whether it is appropriate to your individual circumstances.

As at the time of compilation, the information in this article is correct, and any estimates, opinions, conclusions or recommendations are reasonably held or made.
The information contained in this article should not be used or relied upon as a substitute for professional advice. To the maximum extent permitted by law, NSF Nominees Pty Limited and third parties disclaim all liability and responsibility for any direct or indirect loss or damage which may be suffered by any recipient through relying on anything contained in or omitted from this article.

How did superannuation start in Australia?
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