Your Superannuation Guarantee is Increasing to 12%!
By William Cowie
Major changes to superannuation guarantees
Superannuation requirements have been increased! From the start of the 2013/2014 financial year, the percentage of superannuation employers must pay employees is higher. Ultimately, superannuation will increase from 9% in 2012/2013 up to 12% in 2019/2020.
Superannuation guarantee increments:
Employers or Payroll Officers:
If you’re an employer or payroll officer, don’t forget these increases and underpay your staff. These changes are mandatory, so you must increase superannuation contributions to employees to at least these minimum rates.
If you’re self-employed, you should adjust your personal superannuation contributions so you’re not falling behind everyone else. Don’t forget, there are tax deductions available for your contributions. Contributing to your own superannuation is a tax-effective investment for retirement savings.
You should check your first income statement at the start of each financial year to make sure your employer has remembered to pay the new, higher superannuation contribution rate. Your employer must increase your superannuation contributions in line with the superannuation changes in the table above.
Why the Increased Superannuation Guarantee Matters
The new rates have significant implications for anyone expecting to remain in the workforce after the scheme is fully complete. The Government expects that the increase to superannuation contribution rates (a full 33% increase, from 9% p.a. to 12% p.a.) will give a 30 year old, on full-time wages, an extra $108,000 in retirements savings – just by turning up to work.
Implications for Businesses
The original plan was to eventually reduce the company tax rate to 28%, in order to soften the blow of this additional expense for employers. The Government has announced that the proposed changes – the 30% tax rate being reduced to 29% from July 2013, and to 28% from July 2014 – will no longer go ahead. This has placed more of the burden on employers.
On the other hand, the increase to superannuation guarantees was announced in May 2010 and is being implemented in small increases over 7 years. Employers have had plenty of time to prepare for the increases and the increments each year are minimal.
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