08 Jul Super Guarantee increase – how will this impact you?
As of 1 July 2013, the Superannuation Guarantee (SG) percentage will rise from 9% to 9.25% with a stepped increase to 12% by 2019. This is certainly a much needed boost for superannuation but at what cost to Australian businesses and their employees?
Are the changes good for business?
In a recent AON Hewitt survey of 160 Australian employers, only one out of five were considering restructuring how they pay staff to make sure the July SG increase will be offset by a cut in take home pay. Four out of ten businesses that pay superannuation on top of salaries are planning to set aside additional funds to cover the increases whilst just under half that were surveyed are moving towards a remuneration package approach to ensure the superannuation guarantee changes get passed to the employee. As labour costs increase, employers will need to consider building flexibility into their remuneration packages and bear these changes in mind when negotiating employment contracts with their employees.
How about employees?
According to the Federal Government, the 33% increase in the SG rate will give a 30-year-old on average full-time wages an extra $108,000 in retirement savings just by turning up for work. Sounds great for younger workers, but not all employees will benefit from the increase. For instance, if your salary package is inclusive of super then your take home pay may be reduced. You will need to read your employment contract carefully to find out how these changes will affect you. There is also the fear that employers may forgo giving their staff pay rises in order to meet their superannuation obligations.
Like all reforms, is important to plan for the future. With six increases over the next six years, failing to do so could lead to bigger problems, including financial penalties.