It looks like we’re all getting a pay-rise, but it’s not going into our bank accounts
I’ve got good news, and bad news.
The good news is we’re all about to get a superannuation increase!
The bad news is that despite it being only weeks since JobKeeper ended, Australian businesses are about to be slugged with the cost increase.
This super increase was supposed to happen on 1 July 2020 but was pushed back due to COVID. However, with just a short time before 1 July you can assume it is going to happen this year, so get ready for it.
The contribution rate to eligible employees is set to increase from 9.5%, to 10% this year, and then to 10.5% from 1 July next year. That may not seem like much, but for small businesses that have not recovered to pre-COVID levels (which is most), it is.
Here’s the X factor: industry super funds profit from more funds under management, so this 0.5% increase is enormous to them. As a result, their TV and radio advertising has shifted significantly in recent weeks, with a lady on an escalator going up suggesting contributions are set to increase, and an elderly couple with a grandchild suggesting if the increase doesn’t happen, they will have to sell their home. A touch extreme!
The messaging is disingenuous though, because the increase is already legislated, so the government can’t back out, and in my opinion it’s too late for them to postpone the increase for another year.
For those who are self-employed or wanting to make a concessional contribution, the cap will increase from $25,000 a year to $27,500 for the 21/22 financial year.
I assume that single touch payroll accounting software programs are smart enough to adjust automatically to the increase, but if you’re a business owner put it in your diary for 1 July that employees will now get 10% of their wage paid into super.