The superannuation guarantee (SG) is due to increase to 10% on 1st July 2021 – a rise of 0.5% from the current 9.5%.
This is the first of five legislated increases scheduled to take compulsory super – the minimum amount that a business must pay into an employee’s super fund – from 9.5% of salary to 12% over five years.
However, given the current economic conditions post-COVID-19, there is talk that the government may postpone the increase when it brings down the budget on 11 May.
The idea of saving Super is to create a nest egg for retirement. However, some believe workers should be free to spend (and save) their income as they choose. There’s also the view that any increase in superannuation guarantee will be at the expense of a worker’s wages.
Interestingly, during the heart of the pandemic, the Federal Government allowed Australians to take money out of their superannuation accounts – over $33 billion was quickly withdrawn, and it’s estimated that about half a million Australians emptied their super accounts, taking them back to square one.
Should the SG rise be pushed through on 1 July, you will need to make adjustments to your payroll to ensure you are compliant with the new SG legislation.
While compulsory super payments are in addition to wages and salary, they do not affect an employee’s take-home pay.
Maintain Compliance of Pick Up the Phone
Regardless of whether or not the SG contribution increases on 1 July, you must maintain SG payments and comply with reporting requirements. If you have problems meeting payments, engage with the ATO immediately, either directly or via your accountant. You will be at less risk of penalty if you make an effort to discuss your situation and come to an arrangement.
If you’re unsure of your SG obligations as an employer, the ATO has developed this free course which takes about two hours to complete.
More Super Changes Coming
Along with the SG rise, there are four other major changes you can expect to see:
1. Super automatically follows employees – When you take on a new employee, you’ll need to pay super into their existing superannuation fund (if they have one), unless they select another fund.
2. Easier fund comparisons – The Australian Government will introduce a comparison tool (MySuper) that ranks funds by fees and investment returns. This tool will also link employees to super fund websites so they can choose a MySuper product and list their existing super accounts (the aim being to encourage consolidation if they have more than one).
3. Greater fund transparency – Super funds will be required to provide more details about their investment decisions and demonstrate how those decisions are in the best financial interests of members.
4. Underperformers will be shown up – MySuper products will be subject to an annual performance test against a benchmark set by the regulator. Underperforming funds will need to inform members by 1 October 2021 and will be identified as such on the YourSuper comparison tool until their performance improves. Additionally, funds that fail two consecutive annual underperformance tests will not be permitted to accept new members until their performance improves.
Super (and More) Made Simple Come 11 May we’ll be able to provide more certainty on changes to the superannuation guarantee. In the meantime, we invite you to contact an expert at the Ayers Group to discuss our payroll and back-office solutions that can help you manage contractor administration, including superannuation contributions, cost-effectively, with efficiency. We aim to help you build your business and grow your wealth by making admin easy.
Ayers Can Help You Find a Solution.
Want To Know More?
Complete the below form to: