The term ‘superannuation guarantee’ might not be one you come across every day, but it’s important to understand because it dictates the minimum percentage of your earnings that your employer has to pay into your super. This money will help fund your retirement.
To understand the importance of the superannuation guarantee, you need to know how it relates to your super. Super is the money paid into your chosen super fund and saved for your retirement. You can contribute personal/voluntary contributions to your super at any time1 and your employer has a legal obligation to contribute regular payments on your behalf2 . Many people will use their super alongside any government age pension payments they’re entitled to, to live a more comfortable lifestyle when they stop working.
The superannuation guarantee
The superannuation guarantee, or SG, dictates the minimum percentage of your earnings your employer needs to pay into your super fund. This percentage is controlled and legislated by the Australian Government.
The SG can change over time so it’s important to know the basics so you can be confident you’re being paid the correct amount of super, and are aware of any future changes which might impact your retirement income.
SG contributions are important for future financial security
The superannuation guarantee is an important part of the superannuation system. It was introduced on 1 July 1992 to increase the financial security of Australians once they are no longer working. Its aim is to provide funding for Australians in retirement, so that fewer people have to rely solely on the Government Aged Pension as a source of income.
What is the superannuation guarantee rate?
The rate of SG has been 9.5% per annum since 1 July 2014. From July 2021, the superannuation guarantee legislation states that super payments will increase incrementally each year until they reach 12% in 2025.
These increases have been legislated by the Australian Government.
What does an increase to 12% SG look like?
Increasing the super guarantee rate will mean Australians accumulate more superannuation over their working lives, increasing the likelihood of a comfortable retirement.
The superannuation guarantee increase is planned as:
|Date||Raised SG||Increase from 9.5%|
|1 July 2021||10%||+ 0. 5%|
|1 July 2022||10.5%||+ 1%|
|1 July 2023||11%||+ 1.5%|
|1 July 2024||11.5%||+ 2%|
|1 July 2025||12%||+ 2.5%|
Over the period of your working life, that could have a sizable impact on your super balance. For an average male or female AustralianSuper member, it's estimated that increasing the SG to 12% could mean retiring with an additional $40,000, and for someone new to the workforce and the Fund, it could mean an additional $90,0003.
Calculate what 12% SG looks like for you
A rise to 12% SG means you will be paid more super and therefore have a higher balance to earn returns from over your accumulation years, and in retirement.
Industry Super Australia (ISA) have developed a calculator that shows what that extra percentage could look like for you.
Am I entitled to be paid superannuation?
If you’re an employee, aged 18 or over and earn more than $450 a month (before tax) then you’re generally eligible to receive SG super contributions. If you’re under 18 you must also work more than 30 hours per week to be entitled to SG contributions. If you’re a contractor you may also be eligible depending on whether you’re considered an employer for super purposes.
Keep track of your super
Check your pay slips to make sure you’re being paid super at the legal SG rate, using the chart above as a reference point.
If you’re an AustralianSuper member you can download the free App to view your most recent payments and your balance. You can also check your insurance, update personal details and make contributions.
What should I do if I’m not being paid super?
Talk to your employer first. If you’re unable to resolve your unpaid super query with them, visit the ATO website or call them on 13 10 20 for a step-by-step guide on how to recover missed or underpaid super.
Remember it is compulsory for employers to pay at least 9.5% of your salary to an eligible super fund like AustralianSuper. These payments need to be made by quarterly deadlines set by the ATO.
1. You should consider your debt
levels, contribution caps that may apply and tax issues before adding to your
super. Limits apply. Visit australiansuper/growyoursuper to
find out more
2. Eligibility requirements apply. Visit www.ato.gov.au for full details.
3. Investment returns are not guaranteed. Past performance is not a reliable indicator of future returns.
This information is general financial advice which doesn’t take into account your personal objectives, situation or needs. Before making a decision about AustralianSuper, you should think about your financial requirements and refer to the relevant Product Disclosure Statement. AustralianSuper Pty Ltd ABN 94 006 457 987, AFSL 233788, Trustee of AustralianSuper ABN 65 714 394 898.
Investment returns are not guaranteed. Past performance is not a reliable indicator of future returns.