10.5% Super Guarantee Faces Businesses In The New Financial Year
On 1 July 2023, the Superannuation Guarantee Rate for employees will increase from 10% to 10.5% of their wage or salary. With this increase, more and more Australians are now examining what that could mean for their super’s long-term performance.
The superannuation guarantee, or SG, dictates the minimum percentage of your earnings that you need to pay into your employee’s super fund. This percentage is controlled and legislated by the Australian Government, and it is estimated that an additional $1.5 billion will be paid into the superannuation system over the next 12 months as a result of this.
For most employees, this will mean an extra 0.5% added to their current salary plus super. But where an employee is on a contract where their paycheck is superannuation inclusive, it could be that they will receive a corresponding reduction in their salary to offset the extra superannuation.
Employers and employees will need to have a discussion about how this will occur for them so that everyone knows the situation they will be in for this financial year.
The continued proposed increase to 12% is still scheduled to happen, with 0.5% increments occurring each financial year until the 2025-26 financial year (when the Superannuation Guarantee Rate will peak at 12%). It might not seem like much, but with the added power of compound interest, singles may see an increase of up to $19,000 more in their superannuation accounts and couples up to $38,000.
The rates applicable to each financial year are as follows:
- 1 July 2022 to 30 June 2023 10.5%
- 1 July 2023 to 30 June 2024 11%
- 1 July 2024 to 30 June 2025 11.5%
- 1 July 2025 onwards 12%
The rate of change for the Superannuation Guarantee Rate had remained at 9.5% between 2014 and 1 July 2021, increased to 10% between 1 July 2021 to 30 June 2022, and had only previously increased twice (in 2013 and 2014 respectively).
If the government decides to delay the increases to the super guarantee, you will be kept informed regarding that information. You can also speak with us if you are uncertain what this could mean for your business or need to change current super payments.
