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Workers warned of July pay cuts: Are you affected?

·3-min read
(left) person places $100 bill in jar, (right) commuters walking
This is what you need to look out for. (Images: Getty).

The amount of superannuation Australians are paid is set to increase in July, but it could come at the cost of workers’ take home pay, experts are warning.

Australian workers must receive at least 10 per cent in superannuation payments as of 1 July, an increase from 9.5 per cent, as part of a plan to eventually increase super payments to 12 per cent.

However, workers have been warned to be on the lookout for pay cuts in the meantime.

“This is a really important step for both men and women in Australia, but particularly women. These broad-based increases are really important for ensuring that every Australian will retire with a comfortable level of super,” Verve Super CEO Christina Hobbs told Yahoo Finance.

“On the corporate side, what we’ve been hearing is that some companies are bringing in this legislation through reducing pay, which we really disagree with.”

She said it’s critical that companies think hard about the ramifications of choosing to subsidise increased super with reduced wages.

“We had a really positive conversation with the head of Sussan Group - they’ve got 90 per cent female employees and they’ve committed to not reducing anyone’s salaries,” she said.

“It’s really important that we see more companies doing that and that we see more companies making public statements saying they’re not going to be reducing salaries in order to increase super.”

Could my pay be cut to compensate for my super increase?

Workers who receive their superannuation as separate to their salary won’t be affected.

However, if a worker’s contract says that superannuation is included as part of their total remuneration package, their employer could cut their take home pay.

Slightly fewer (48 per cent) employers pay super on top of workers’ base salaries, while 52 per cent include it in the total package, according to Mercer.

The same Mercer analysis found around one-in-five employers plan to subsidise the cost of the increased super payments through reduced salaries.

Companies including Telstra, AGL and Macquarie Group have said some workers will see their take-home pay reduce, although it’s generally higher-paid staff affected.

“If a company is going to change your overall package structure, they should be informing you,” Hobbs said.

“What we would advise is for people to have a look at their payslips and make certain that the new superannuation guarantee has been applied. So it will be increased by 0.5 per cent.”

Balance boost

Christina Hobbs. (Image: Getty).
Christina Hobbs. (Image: Getty).

The increase means a worker paid $85,000 a year would see their super paid increase from $8,075 to $10,200.

For a 25-year-old, the overall superannuation increase from 9.5 per cent to 12 per cent would add about $163,000 to their super balance, Finder analysis found.

Workers also need to check that the superannuation is being paid into their superannuation account, rather than just recorded on their payslips.

Hobbs recommends workers check their superannuation accounts quarterly to ensure that accounting errors or larger payment flaws aren’t stopping their savings from growing.

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