12% Superannuation Explained

In May 2010, working Australians received a pleasant surprise when the Federal Treasurer, Mr Wayne Swan, announced that compulsory employer superannuation contributions were set to jump from the current 9% of salary to 12% by July 2019, a whopping 33% increase in Superannuation contributions.

So effective the 1st of July 2013, SG entitlements will increase to 9.25% and to eventually 12% from July 2019.  Below is a handy table for you to see what you are entitled to and when.

 

Superannuation Guarantee entitlements

Financial Year

Rate (%)

2010/2011

9

2011/2012

9

2012/2013

9

2013/2014

9.25

2014/2015

9.5

2015/2016

10

2016/2017

10.5

2017/2018

11

2018/2019

11.5

2019/2020

12

Source: Adapted from table appearing in Australian Government fact sheet ‘Superannuation – Increasing the Superannuation Guarantee rate to 12 per cent’ located on the ‘Stronger, Fairer, Simpler’ website (www.futuretax.gov.au)

According to the Federal Government, the 33% increase in the SG rate will give a 30-year-old on average full-time wages and extra $108,000 in retirement savings just by turning up for work.

There has been, and will continue to be, some resistance from employers, especially small business employers, to this policy. The federal government argues however that the 3-year lead time (from May 2010 through to July 2013) before the phased increases begin should give employers plenty of time to prepare for the increase. Also, the company tax rate will be eventually dropped to 28% which will soften some of the SG increase for employers. From July 2013, the company tax rate will decrease to 29% (from 30%) and from July 2014, the company tax rate will decrease to 28%.

 The federal government also argues that due to the lengthy lead time, employers will be able to take the SG increase into account when negotiating future wage agreements, and that the SG rate increase won’t stop real wages growing.

 

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