Superannuation increase

On 1st July 2021 the Superannuation Guarantee rate will rise from 9.5% of an employee’s ordinary time earnings to 10%. This is the first rise since 2014. It is set to continue to increase by 0.5% each year until it reaches 12% on 1st July 2025. This increase is a statutory increase and therefore compliance with the increase is mandatory for employers.

The 0.5% increase does not mean that everyone gets an automatic pay increase however, this will depend on your employment agreement. If your employment agreement states you are paid on a ‘total remuneration’ basis (base plus super guarantee and any other allowances), then your take home pay might be reduced by 0.5%. Meaning, a greater percentage of your total remuneration will be directed to your superannuation fund. For those paid a rate plus superannuation, then your take home pay will remain the same, but your superannuation fund will benefit from the increase. If you are used to annual increases, the 0.5% increase might simply be absorbed into your remuneration review.

Where employee salaries are paid at a point other than the first day of the month, an employer will need to ensure the calculations are correct across the month (i.e. for staff paid on the 15^th of the month they are paid the correct super guarantee rate for June and July in their pay and not just the June rate). Employers need to ensure that they pay the correct super guarantee amount in the new financial year to avoid the superannuation guarantee charge.

Although employees rely on their employer to pay their superannuation and do not have access to the funds, it’s important to remember that it is still our responsibility to ensure that it’s being kept up to date and working well for us. Complacency in management of our fund can lead to a loss of earnings over time which can make a big difference to our retirement, so it’s worth taking some time to ensure everything is set up properly and in line with our values and future goals.