Doyle Bookkeeping

Superannuation Guarantee percentage increase 1st July 2021

Super Guarantee Blog Post
Reading Time: 2 minutes

Changes to superannuation were announced in the 2020-21 Federal Budget, when the government unveiled its Your Future, Your Super package. It’s been frozen at 9.5% since 2014, despite having been originally scheduled to reach the 12% mark by 1 July 2019.

As per the May 2021 Budget – Super will increase from 9.5% to 10% of Ordinary Time Earnings as of 1st July 2021. It will continue to increase in increments of 0.5% every financial year until reaching 12% by 1st July 2025.

See table below for a breakdown of increment increase effective dates:

https://www.ato.gov.au/Rates/key-superannuation-rates-and-thresholds/?anchor=Superguaranteepercentage

What this means for Employees

  • More Super to be paid by your employer
  • Potential decrease in take home pay depending on whether your salary is inclusive or exclusive of superannuation – check contract with your employer if you are unsure.
  • Your super will follow you when you change jobs
  • Greater transparency about how your retirement savings are invested
  • Super Fund underperformance to be publicly named and shamed. The government’s online portal will rank MySuper products by fees and investment returns, and also show consumers where their current super account sits.

Steps Employers should take

  • Determine whether employee wages are inclusive and exclusive of super
  • If Super is set at 9.5%, you will need to increase this to 10% by the 1st July
  • Advise workers of the changes especially if their take home pay will be impacted
  • Carefully consider the entitlements owed to workers and whether adjustments need to be made. Do you need to rectify any historical superannuation practices?
  • Take this opportunity to change existing contracts to reflect more moderns terms (especially if employers wish to absorb the increase without a reduction in take home pays of workers)

Common Payment Types

Superannuation is paid on “Ordinary Time Earnings”.  You can find the Superannuation Guarantee Ruling (SGR 2009/2) here which stipulates payment type and whether Super is payable according to the specified payment, such as Overtime Pay, Leave payments, Annual Leave Loading, Allowances:

https://www.ato.gov.au/law/view/document?LocID=%22SGR%2FSGR20092%2FNAT%2FATO%22&PiT=99991231235958

 

Share this post