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The Super Guarantee is rising to 11%: What this means for your salary and retirement

Peter Terlato avatar
Peter Terlato
- 5 min read
The Super Guarantee is rising to 11%: What this means for your salary and retirement

Superannuation contributions for Australian employees will increase from 10.5% to 11% over the next financial year.

The Super Guarantee (SG) is the minimum percentage of your earnings an employer must pay into your super fund.

Your annual super entitlements for the 2022/23 financial year must be at least 10.5% of your ordinary time earnings. For example, if you earn $85,000 per annum (pre-tax), your employer must contribute at least $8,925 to your super.

For the 2023/24 financial year, the percentage of super contributions employers must pay rises to 11% of earnings.

In July 2021, the federal government amended the Superannuation Guarantee (Administration) Act 1992, increasing the percentage of salary or wages that employers must commit to employee superannuation by 0.5% each year. This rate is due to peak at 12% by July 2025. Prior to 2021, the SG had remained unchanged at 9.5% since July 2014.

The table below outlines the annual increases to the super guarantee over the five years between 2021 and 2025.

Period:

Super Guarantee (SG)

1 July 2020 - 30 June 2021

9.5%

1 July 2021 - 30 June 2022

10.0%

1 July 2022 – 30 June 2023

10.5%

1 July 2023 – 30 June 2024

11.0%

1 July 2024 – 30 June 2025

11.5%

1 July 2025 and beyond

12.0%

Source: The Australian Taxation Office (ATO)

What do you need to do about the changes to super?

As an employee, you don’t need to do anything with regards to the increase in super contributions. Your employer has the responsibility of making the necessary adjustments. However, it would be sensible to regularly check that your super payments are up-to-date and accurate.

Employers must make SG contributions into your super account at least once every three months, in line with the quarterly super payment due dates set by the Australian Taxation Office (ATO). These hikes come into effect at the beginning of each financial year on 1 July.

This means that you’ll be able to see your first super payment at the new rate of 11% from 28 October 2023 - the next quarterly due date that covers the earning period of 1 July to 30 September.

Ensure that you properly understand the terms of your contract or employment agreement and confirm that your contributions are being paid on time by regularly reviewing your super account.

Will the super guarantee affect my take home pay?

Employees who receive their super payments in addition to their base salary will not have their take home pay affected, as the increase in super will result in an increase in total remuneration.

Those on a superannuation-inclusive salary package may have their take home pay affected by the increase. 

For example, if you receive a salary package of $90,000 inclusive of super, you would currently have $9,450 per year deducted from your take home pay to cover your super guarantee. When the super guarantee rises to 11% in 2023/24, if your salary remains unchanged, your take home pay will be reduced by a further $450 per year.

Check your contract or have a discussion with your employer if you’re unsure how these changes might affect you personally. Consider contacting a registered tax professional if you need help with your tax and super obligations.

How will these changes affect my retirement savings?

The increase in SG payments means that a higher percentage of your earnings (on top of your salary) will be directed towards your super fund. This can result in a larger nest egg over time. The additional contributions made by your employer can help your superannuation grow more quickly, potentially providing you with a more comfortable retirement in the future.

It's important to note that the impact of these increases will depend on various factors, such as your current superannuation balance, your age, and the investment returns earned by your fund. Additionally, the rate increase may also have implications for employers, who will need to allocate a larger portion of their payroll expenses to superannuation contributions.

Australians are told that a super balance below $500,000 may not be enough to enjoy a modest lifestyle in retirement. However, the amount you may need could actually be much lower if you are already a homeowner, like most retirees.

What to do if your employer isn’t paying your super

While your payslips may show that your super contributions are being deposited, it’s always worthwhile checking that this is actually the case. You can check your super account via your myGov account.

If you discover that your employer has not been paying your super, paid your super late or paid your super to an incorrect fund, you can report them using the ATO's handy online support tool.

How to change super funds in Australia

Thinking about switching your superannuation fund? There could be several reasons why you're considering making the change. Maybe you've heard that other funds are doing better and offering higher returns? Or perhaps you're looking to save on fees? Alternatively, you might be interested in a fund with health insurance or investment options?

If you're interested in switching to a new superannuation fund, it's important to know what to consider when choosing a new super fund. You don't want to fall into any traps or make any costly mistakes during the transition. Compare your options before deciding on a new home for your retirement nest egg.

Once you have selected your new super fund, let your employer know so that they can deposit their contributions into the right fund. You and your employer must both fill in the ATO’s superannuation standard choice form.

Compare super funds

Product database updated 27 May, 2024

This article was reviewed by Personal Finance Editor Alex Ritchie before it was published as part of RateCity's Fact Check process.

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