What is Superannuation and How Does it Apply to Working Holiday Visa Holders in Australia.
As a backpacker in Australia on a Working Holiday Visa one of the first things you will need to do is set up a superannuation fund.
You might be wondering: what is a superannuation fund? This is a totally normal thing to wonder because it is something not every country does.
So What is a Superannuation Fund?
A superannuation fund is a pension scheme run by the Australian government. It requires employers to contribute 11% of an employee’s total pay into the employees superannuation account. This account is held by a company for the employee. The employees’ money is invested into a diversified profile of stocks and bonds.
The idea is the value of this money will Increase over time; creating a nice retirement fund for the employee. Of course for working holiday makers who don’t plan to retire in Australia;this is a bit different.
When working holiday makers decide to leave Australia they are able to claim superannuation money back. This is called a Departing Australia Superannuation Payment.
Why do Working Holiday Visa Holders Need a Superannuation?
You might be thinking: I don’t plan to retire in Australia, why do I need a superannuation. The truth is a superannuation fund is required for all employees in Australia. This includes backpackers.
Does Superannuation Come Out of My Pay?
No! Superannuation is an additional payment into your super account on top of your regular pay.
Does Superannuation Get Paid Automatically?
During the onboarding process at work your employer should ask for your superannuation details. If you don’t already have a super account you will be prompted to sign up for one. Once this is set up your superannuation should be automatically paid into with every paycheck.
When you get your first pay check the amount paid into your super should be listed. You should also be able to log into your super account online and see what has been paid into it. If you cannot find money being paid into your super on your pay check or online via your super account you need to contact your employer.
Make sure this is being paid regularly. It is a legal requirement so if your employer is not paying into your super be sure to contact fair work to let them know!
If I am Self Employed, Do I Pay Superannuation?
If you work for yourself as a “sole trader” while on a working holiday visa you have the option to contribute to a superannuation fund. This is completely optional. If you do not plan to stay in Australia until retirement I do not recommend you contribute. When you leave Australia; the money in your super fund will be heavily taxed.
When Should a Working Holiday Maker Set Up a Superannuation Fund?
You can set up your super fund as soon as you have your tax file number (TFN). I recommend setting one up as soon as possible. It is fairly easy and can be done online. You will need to set one up before you can start working at your first job. Many trial shifts in Australia are paid so you will need a superannuation before a paid trial shift as-well.
What to Consider When Choosing a Superannuation Fund as a Working Holiday Visa Holder
Working holiday visa holders will have a superannuation fund for a short amount of time, rather than long-term. This means there are some things to consider when selecting a plan.
- No exit fees- important for when you withdraw your money with DASP
- Low admin fees-admin fees are not worth the cost for a short term investment
- Ease of DASP claim process- some funds make this easier than others
- Online access- most funds have this, it makes it easy to keep track of
- Trusted company-keep your money somewhere tried and true rather than a startup
Here are Some Good Super Choices for Working Holiday Makers
Australian Super
One of the largest and most trusted funds in Australia. Known for low fees and strong long-term performance. With an easy online setup, low fees, and no exit fees. This is a steady and reliable choice.
Tip: Consider the AustralianSuper Socially Aware Option: this choice is screened to avoid fossil fuels, gambling, tobacco, etc.
Hostplus
Very popular among hospitality and retail workers; two of the most common industries for backpackers. Offering some of the lowest admin fees in the market. It has a balanced option that has performed well historically, and no exit fees. This is a solid choice.
Tip: Consider the Hostplus Socially Responsible Investment Option. This choice screens out harmful industries while remaining low-fee.
Rest Super
This super fund was originally set up for retail and service workers. Making a great choice if you’re working in shops or supermarkets. Rest Super has flexible investment options,easy to use online tools, a great mobile app and no exit fees. This is an easy and convenient choice.
Green and Socially Conscious Superannuation Choices
Another really cool option is to choose an environmentally and/or socially conscious superannuation fund. These funds are more selective with what they put money into so you can avoid funding things like fossil fuels and tobacco. Funnel your money into eco-conscious projects.
Some “Green” Super Choices Include
Australian Ethical Super
With a 100% dedication to ethical investing; Australian Ethical Super avoids putting your money towards fossil fuels, gambling, tobacco, and weapons industries. They have a transparent ethical screening process and are certified by the Responsible Investment Association Australasia (RIAA). This fund has a strong focus on renewable energy, health care and sustainable industries. They do have slightly higher admin fees.
Future Super
A 100% fossil fuel free fund. Future Super is the first Australian fund to focus entirely on climate impact. With absolutely no investment in coal oil or gas. This fund has a strong focus on renewable energy and community projects making it a great choice for the environment. They also actively campaign for climate and social justice issues. They do have slightly higher admin fees.
Verve Super
This fund is exclusively for women and nonbinary people. Designed by and for women, non-binary, and gender diverse people. Verve Super focuses on ethical investing in gender equity and environmental projects. With a strong dedication to transparency and investing in companies with diversity programs and environmental policies. Although this is slightly niche it is a really unique option for some people.
How to Set up a Superannuation Account as a Working Holiday Visa Holder
Now that you have a super fund picked out it’s time to set up an account. Go to the website of the super fund you want to choose and fill out the online application.
Some information you will need to provide:
- Your full name
- Your date of Birth
- Australian Address
- Tax File Number
- Passport details
It’s ok to use a hostel or temporary accommodation as an address, you can change this online if you move.
Once your account is set up they will email you with some details. Make sure you save these. When you get a job your employer will need the following details to set up your superannuation payments.
- Super Fund Name
- Fund ABN
- Fund USI
- Your member number
Now just set up your funds mobile app or online portal so you can keep track of your payments.
How to Claim Your Superannuation When You Leave Australia
When you are leaving Australia permanently you can claim DASP this stands for Departing Australia Superannuation Payment.
Do not claim DASAP if you plan to return to Australia on another Working Holiday Visa. This also applies for a student visa, or any other visa that would allow you to work. Planning to come back on a tourist visa is fine.
Once you are sure you want to claim DASP visit the DASP online portal. You can only submit this form when you have left Australia. It will take 28 days or less to process your claim. The tax rate for Working Holiday Makers claiming DASAP is 65%.
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