The 2021 federal budget stipulated that the compulsory superannuation guarantee — the proportion of wages that employers must contribute to their employees’ retirement savings, is legislated to increase half a per cent a year starting on 1 July 2021 before reaching a final value of 12.00% by 1 July 2025.
The compulsory superannuation guarantee rates are scheduled to increase as follows:
Period | General super guarantee (%) | Super guarantee (%) for Norfolk Island |
1 July 2021 – 30 June 2022 | 10.00 | 6.00 |
1 July 2022 – 30 June 2023 | 10.50 | 7.00 |
1 July 2023 – 30 June 2024 | 11.00 | 8.00 |
1 July 2024 – 30 June 2025 | 11.50 | 9.00 |
1 July 2025 – 30 June 2026 | 12.00 | 10.00 |
1 July 2026 – 30 June 2027 | 12.00 | 11.00 |
1 July 2027 – 30 June 2028 and onwards | 12.00 | 12.00 |
It is therefore important to note to all employers that effective 1 July 2021, the superannuation guarantee rate will increase from 9.50% to 10.00%. We outline below some issues that employers should consider in light of the increase to the superannuation guarantee rate from 1 July 2021:
- Whilst most online payroll packages will factor this increase within their annual payroll updates, we recommend employers clarify with their payroll provider prior to 1 July 2021 how the change will be implemented in their payroll system, including conducting testing prior to July 2021.
- With only a month remaining of the current financial year, employers should start planning and preparing for how the superannuation guarantee increase will impact their employee remuneration arrangements from 1 July 2021. For example:
- Where an employee is remunerated through a superannuation-inclusive package, in the event of not having a remuneration review, their take-home wage payments will most likely decrease from 1 July 2021. It is recommended that employers consider communicating the likely decrease with their employees prior to 1 July 2021 to avoid any queries or complaints from employees;
- Similarly, where an employee is on a ‘wage + super’ remuneration package, employers will need to factor the increase in superannuation guarantee payable in budgeting for upcoming employee benefits. This budgeting will need to factor in the cost impact where there are increases to employee remuneration (i.e. wage increases), as this will result in an increase to both superannuation and wage costs.
- Employers should establish their approaches to the increase early, because underpayment or late payment of superannuation guarantee are likely to attract the attention and penalty from the Australian Taxation Office.
If you require assistance or would like further information regarding the superannuation guarantee increases, please contact your Hall Chadwick QLD advisor.
