A complete guide to superannuation for backpackers
You've come to Australia on a Working Holiday Visa (WHV) and you’ve just secured your first job. As you begin filling out your employee onboarding forms, you see a rather confusing question: What are your super details?
No, Clark Kent, your employer isn’t asking for your superhero alter ego. They are instead asking where they are supposed to send extra money, a significant amount that is separate from your normal pay, that you can then collect as you leave Australia.
If that sounds pretty good, it’s because it is.
In this guide we’ll walk you through superannuation, the Australian pension scheme that doesn’t just benefit retired Aussies, but that can form a nice little reward for working holiday makers too.
What is superannuation?
Compulsory superannuation is the Australian pension scheme that requires employers to contribute to the retirement funds of their employees. Implemented in 1992, it is designed to reduce the burden on the government to support Australians after they retire.
As of the 2022-23 Australian financial year the superannuation contribution rate sat at 10.5% of an employee’s total pay, including regular earnings, bonuses, commissions, shift loading and casual loadings (but not overtime earnings). This rate is set to rise by 0.5% for the next three years, reaching 12% by 1 July 2025.
Super is paid into a dedicated super account, run by a super fund, that an individual doesn’t have access to, apart from a handful of exceptions, until they reach retirement age. But because most working holiday visa holders will leave Australia long before they retire, they are permitted to access their superannuation when their visa expires and they leave the country.
Do working holiday visa holders pay superannuation?
As a working holiday visa holder, you don’t pay superannuation, but you do get paid superannuation. It’s a separate payment that is made by the employer and sent into a dedicated account that you don’t have access to – apart from exceptional circumstances such as leaving the country at the end of your visa.
In Australia all employers are required to pay superannuation to all employees who are over 18 years of age and receive a pre-tax salary of $450+ per month. It doesn’t matter whether the employee is an Australian citizen, or which visa they might hold (provided they are permitted to work).
How do I set up a super account as a backpacker?
The best time to set up a super account is before you get your first job in Australia. There are hundreds of different super funds in Australia, each of which offers different selling points – many serve specific industries or focus on specific themes (such as making environmental, social and governance [ESG] investments), and fees and performance figures will differ. As such it’s wise to shop around and find the right super fund for you, and setting up an account is usually as easy as filling in a form.
If you don’t have a super account when you get your first job, your employer will generally suggest using their go-to fund. This can be fine, but it’s also not usually the optimal choice, so it’s far wiser to select your own fund.
An individual can have multiple super accounts. Unprepared backpackers will often open a new super account with every new job, ending up with a handful at the end of their trip. This isn’t ideal, as it means you’ll be paying separate fees in every single one, which can end up draining your money.
Does super get paid automatically?
After you hand over the details of your superannuation fund to your employer, they will automatically pay super contributions, in accordance with the super rate at the time, to your nominated fund. These payments are usually sent quarterly, and don’t require any action on your end.
Do I still pay super if I'm working for myself?
As a working holiday visa holder, you’re able to apply for an Australian business number (ABN) and work for yourself as a 'sole trader'.
While you can pay superannuation as a sole trader, there is no requirement to do so. Most backpackers who work for themselves won’t bother, as this money can be taxed at a rate of 65% when the time comes to retrieve it. This also locks a portion of your earnings away for the entire trip – earnings that might be useful on your travels.
If you still choose to put super aside as a sole trader, the amount you pay is totally up to you.
Can backpackers get a super refund when they leave?
As mentioned above, a working holiday maker can indeed access their superannuation when they leave Australia. The departing Australia superannuation payment (DASP) allows you to apply to have your super paid out if:
- You earned super while on a working holiday visa.
- Your visa has expired (or has been cancelled).
- You have left Australia and don’t hold another active Australian visa.
- You aren’t a citizen of Australia or New Zealand, and aren’t a permanent resident of Australia.
Rather than getting their super paid out, New Zealand citizens may be able to transfer it over to their home fund under the Trans-Tasman retirement savings portability scheme.
How do I claim my super after I leave Australia?
If you’re eligible to claim your superannuation, you can do so through the DASP online portal. The money should be sitting in your super account, but in some circumstances your super fund may have transferred the balance to the Australian Taxation Office (ATO) as unclaimed superannuation money. Don’t worry – you can still find and claim this ‘unclaimed’ money using the tool above.
You can actually start this process while you’re still in Australia, and it’s wise to do so, as it will be easier to gather all the necessary information together while you’re in the country. But keep in mind that you’ll only be able to submit the application once you leave the country.
Your claim will be processed within 28 days of your super fund or the ATO receiving all the information they require. You should therefore be careful to review all the information you’ve provided to ensure it is accurate before submitting your application, as incorrect or incomplete info will delay the process.
DASPs are taxed, and at the rather heavy rate of 65% for working holiday makers, though there may be a tax-free component to the payment. Once processed, you will be paid one of three ways:
- An electronic funds transfer (EFT) to an Australian bank account.
- An Australian dollar cheque.
- An international money transfer (super fund applications only).
What is the best superannuation for working holiday visas?
With hundreds of super funds competing for the attention of Australian workers, finding the best for you can be a challenging affair. To help you cut through the noise, here are a handful of funds that we at Backpacker Job Board feel are worthy of your hard-earned money: