The Superannuation Guarantee (SG) is scheduled to increase to 10% from 1 July 2021. If you have employees, you need to be ready for this legislated increase.
What is The Superannuation Guarantee?
The Superannuation Guarantee (SG) is a payment that employers in Australia are obliged to make on behalf of their employees. These payments are due to be made on a quarterly basis, 28 days after quarter end, which were previously at a rate of at least 9.5% of the employee’s ordinary time earnings (OTE).
What is changing?
After being put on hold for the 2015-2021 financial years, the progressive increases to the rate of Super Guarantee that were legislated in 2011 are due to recommence from 1 July 2021.
From 1 July 2021, the rate of SG will increase to 10% of Ordinary Time Earnings (OTE).
It will continue to increase by half a percent each year until it reaches 12%.
|1 July 2021 – 30 June 2022||10%|
|1 July 2022 – 30 June 2023||10.5%|
|1 July 2023 – 30 June 2024||11%|
|1 July 2024 – 30 June 2025||11.5%|
|1 July 2025 – 30 June 2026 onwards||12%|
What do you need to do?
Employers should ensure their software is kept up to date and correctly configured so that their employer super contributions are calculated correctly.
Click the relevant software link below to see what steps you need to complete to update your superannuation guarantee settings:
Employers who engage employees on individual agreements will need to review these to ensure that the SG rate is correct. Those who are employed on a ‘super inclusive’ remuneration package will need to decide what to do ahead of 1 July – do employees get their super increase at the expense of their take-home wages?
More changes expected from the 2021 Budget
Under the current superannuation arrangements, if an employee earns less than $450 per month from one employer, they are not entitled to receive the superannuation guarantee.
Treasurer Josh Frydenberg recently announced in the 2021 Federal Budget a proposal for the minimum monthly earnings threshold of $450 per month to be removed by 1 July 2022. This would result in all employees being entitled to employer-paid superannuation, regardless of how much money they earn.
Note this change will still need to be legislated however it is hard to see it being opposed.
Please email or call our office, on (02) 4455 5333 if you have any questions at all.