The amount of superannuation Australians are paid will increase from July 2021 after the Government made no changes to the schedule in the Federal Budget.
The superannuation guarantee is scheduled to increase from 9.5 per cent to 10 per cent in July, and then to 12 per cent by July 2025.
However, the July 0.5 per cent has been heavily debated after Liberal MPs, industry groups and senior economists claimed the increase would come at the cost of wage growth.
The Labor party and the superannuation sector disagreed, arguing that the Government wanted to undermine the retirement system and workers’ wages.
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As the Federal Budget included no changes to the scheduled increase, Australian workers will receive more in their superannuation.
The move to 10 per cent should see the $3 trillion superannuation sector receive an extra $5 billion of funds every year.
“With the legislated increase of the Superannuation Guarantee to 12 per cent, and a maturing superannuation system, we expect to see a greater proportion of retirees relying less on the Age Pension and more on their retirement savings,” Association of Superannuation Funds of Australia CEO Martin Fahy said.
What it means for you
If you’re earning $85,000 a year plus superannuation, then your employer is paying you $8,075 a year in superannuation, Finder said.
When the super guarantee increases to 10 per cent, that will climb slightly. Then, by July 2025, you’ll be earning $10,200 a year in superannuation.
Over time, that’ll add up. If you are a 25-year-old worker, then that increase from 9.5 per cent to 12 per cent will add around an extra $163,000 to your retirement balance.
But there’s another side to it: employers will need to figure out how to pay this extra superannuation.
This will come down to your salary package. If your superannuation is part of your whole salary package, your employer could choose to reduce your take home pay to cover the superannuation payments.
But if your package is $85,000 plus superannuation, then your take home pay will stay the same.
According to Mercer analysis, 48 per cent of employers pay superannuation on top of the base salary, while 52 per cent include it in the total salary package.
The same analysis found that 21 per cent of employers are planning to have their employees bear all or some of the cost of the increase.
“Asking employees to absorb or split the additional superannuation guarantee, or even subsume the increase in existing above-minimum employer contribution all might be perceived as putting economics before empathy,” Mercer warned.
“Moreover, reducing the real or perceived employee benefit is likely to put pressure on employee engagement and retention.”