Superannuation is simply saving money in a trust for your retirement. If you are an employee, your employer will pay a certain percentage of your salary into your super account. Currently, the percentage is at 9.5% and will gradually increase to 12%.
The money in the superannuation trust is also invested, so as it grows over the inflation and provide enough retirement fund when you retire.
All super fund is managed under a trust. A trust is an agreement between a person or a company that holds assets for the benefit of others. Those who hold the assets are called trustee and those who benefit are called beneficiaries.
A legal document that governs the trust is known as a trust deed.
A trustee can be a single person or group of people or a company, which has legal control over the fund’s assets and profits. The company usually is a collaboration of fund managers who are experienced in managing and investing fund’s money for better returns. The members of the super fund who are also the beneficiaries of the superannuation fund.
A trustee controls the money and makes the decision of investing money, buying assets. A trustee can also be a beneficiary if there are other beneficiaries.
A trustee is the gatekeeper and decides how much benefit a beneficiary gets from a trust, being a beneficiary by default doesn’t guarantee a benefit.
Unlike a family trust, superannuation is governed by specific legislation called Superannuation Industry supervision Act (SIS Act), this act was cited in 1993. This law was written to protect the beneficiaries of their retirement super fund, all investments made through this fund should benefit its members.
In a way, you can call it forced saving of money so as it can be withdrawn when you have no ability to earn i.e during your old age. These savings will be invested in a way to make the fund grow and benefit the members.