Superannuation Guarantee Rate Increase – What does this mean?
From 1 July 2021, the Federal Government has legislated that the Superannuation Guarantee (SG) rate be increased from 9.5% to 10% of your wage or salary.
Basically, this means your employer must contribute, on your behalf, to your nominated complying superannuation fund, as a minimum, this new percentage based, on your ordinary time earnings. Such contributions help to fund your retirement.
However, this may not sound as rosy as it is intended.
Depending on your employment contract, it may mean your take-home pay has decreased because your superannuation has increased. For example, if your employment contract states your total package is $x per annum, including the Superannuation Guarantee, then this may be the case. In other words, your total salary package has not altered, only the components that make it up.
Some employers may increase your total package anyway, so your take-home pay remains the same. Great news if they do, but no guarantee this will happen.
Reading and understanding your employment contract is essential. If you are confused by it, you should have a lawyer explain the employment contract’s terms and conditions.
On the other hand, some employment contracts may automatically increase your total package according the legislated SG increase. This process may be part of your employment terms and conditions.
Therefore, while the Federal Government announced the SG increase, the consequence on your earnings is subject to questions on how it works for you. In short, will your employer wear this additional cost to their business?