The term retirement is used when an employee leaves a job permanently and the term superannuation is used when the employee retires to a job with pension benefits. Superannuation benefits can also be called retirement benefits.
Employees can retire at any time under voluntary retirement (or) after reaching a certain age (58-60 yrs). But to get a pension they have to reach that certain age limit depending upon the pension scheme they applied, reaching that age is called superannuation
Examples of Superannuation
Superannuation in EPF: To become eligible for pension in the EPF scheme, the employees have to reach 58 years of age(called superannuation) and also they need to contribute to the EPF scheme for 10 or above 10 years.
Superannuation in NPS: When a person reaches 60 yrs (called superannuation) then he can withdraw 60% lumpsum amount from their NPS investment, the remaining 40% should be used to buy an annuity plan.
For government employees: Similarly, the central/state government employees in India will receive their retirement /superannuation benefits after reaching 60 yrs of age.
For private employees: Even some private companies will also accumulate superannuation funds, they will pay that amount whenever the employees leave the job.
Difference between Pension and Superannuation
Pension is an amount given every month after the retirement of the employee, whereas superannuation means reaching the pension eligibility age.
But remember, age is not only the main criteria to receive the pension, every employee has to plan and should make some contributions to any of their favorite pension schemes at their young age, only then their retirement age will be considered superannuation.
So it is always better to plan your retirement as early as possible so that you will receive more pension amount.
What is a superannuation fund?
The amount collected from the employees and employers every month under any pension scheme will be called a superannuation fund. This amount will be invested in government bonds, index funds, and ETFs, etc… for higher returns, and paid to employees after retirement.
Who is eligible for superannuation benefits?
If you are a government employee, then you will automatically become eligible for superannuation or retirement benefits when you reach 60 years.
But if you are a private employee then you have to invest in any pension schemes like EPS, NPS, etc, if you don’t invest at your young age then you don’t receive any pension benefits.