Millions of Australians are on track to pocket thousands more in retirement, with the next increase to the superannuation guarantee kicking in from July 1.
The rate will rise from 11.5 percent to 12 percent, meaning nearly 10 million workers will receive larger employer-paid contributions to their super. For an average income earner, this translates to an extra $317 added to their account over the next year.
The change is expected to benefit younger Australians and low-income workers the most. New analysis by the Super Members Council (SMC) found that more than half of those set to benefit are under the age of 40, with workers in their 30s making up the largest group. A typical 30-year-old could retire with $22,000 more in super as a result of the 0.5 percentage point increase alone. Taken together with the full rise from 9 percent to 12 percent over the past decade, the additional retirement savings could reach $132,000.
Around a third of people who will see a rise in their contributions earn less than $50,000 annually, while 70 percent earn under $100,000. Workers in Western Australia are set to receive the highest average increase in the country, at $344 for the year.
While the boost is welcome news for retirement balances, Australia’s largest accounting body, CPA Australia, is reminding workers to check how the change might affect their take-home pay.
The minimum contribution employers must make into super will increase to 12 percent from July 1, but for some workers, this might come out of their total pay package rather than being paid on top. That could lead to a slightly smaller pay cheque if their contract includes super as part of the total salary figure.
CPA Australia’s Superannuation Lead, Richard Webb, said it was important to know how the change applies to your specific employment terms.
“If your employment contract includes a total remuneration package including super, this could mean less take-home pay at the end of the month,” he said. “However, for those on award or enterprise agreements, your pay agreement is more likely to be a salary, which means the change will not affect your take-home pay.”
He encouraged workers to speak with their employer and check their payslips after the change takes effect to avoid any surprises.
“For a young person on $60,000 a year, the increase translates to an extra $300 in their super account every 12 months. But depending on investments and fees, the cumulative effect of that increase could ultimately be worth thousands by the time they retire.”
Mr Webb said the start of the new financial year was a good time to review super accounts, especially with no further increases to the Superannuation Guarantee currently legislated. He suggested checking fund options, consolidating multiple accounts, and using tools like the Moneysmart super calculator to project retirement savings.
He also noted that superannuation payments will now be included in the government’s Parental Leave Pay scheme, giving new parents added support.
“It’s good to have finally reached the point where Australians will receive this much-needed increase in minimum superannuation contributions, but it should not have taken this long,” he said.
Super Members Council CEO Misha Schubert said the increase would help Australians enjoy more secure and fulfilling retirements.
“This boost to retirement savings will help fund the things that matter most – more help with paying the bills, spending time and making memories with the family, trips away and financial security,” she said.
She described Australia’s super system as a world leader, offering financial independence in retirement while reducing the strain on the age pension. Before compulsory superannuation was introduced in 1992, just 10 percent of retirees relied on it for income. Today, 90 percent of Australians aged 30 to 50 have super.
The federal government’s Intergenerational Report shows that despite a sharp rise in the number of older Australians over the coming decades, spending on the age pension is projected to fall. By 2063, it is expected to drop from 2.3 percent to 2 percent of GDP.
