I think Starcraft has done a pretty good job at explaining but to be clear it is the only 'privatised' social security that we have in Australia, at least as far as I know, and as already mentioned we still have the pension for those who have not accumulated sufficient Super for whatever reason.
Just to clarify with an example. My employer contributes a minimum of 9.75% per year which is separate from and quoted independently from my salary. We are then encouraged (by our employer) to contribute additional amounts from our salary, with our employer matching additional contributions that we make up to a maximum of 5%. i.e. if i put in 5% extra, so will they. Just to sweeten the deal we can make our optional payments pre income tax. As a result you can be banking up to 19.75% Super per year (14.75 from the employer and 5% by the employee) This is set to increase to nearly 24% in the next couple of years.
I presently have my Super invested (my choice) in a 'high risk' portfolio (figured it was a good option post GFC) which has seen an average return of nearly 20% over the last 5 years. My contributions at the moment total only 13.75% (because I'm still paying student loans), but all in all I've accumulated nearly 100K in the past 5 years, on a decent, but not particularly high, salary. That's money sitting in my Super account, managed by a company of my choosing and invested as I see fit.
If you ask me I reckon that's pretty good.
