Superannution Increase to 11%
Superannuation Increase to 11% in 2023: What You Need to Know
If you're an Australian worker, you may have heard about the upcoming increase in superannuation payments. From 1 July 2023, the compulsory superannuation contribution rate will rise from 10.5% to 11%, meaning employers will be required to contribute an additional 0.5% of their employees' salaries towards their retirement savings from the first pay cycle of the 2023/2024 financial year..
Why the Increase?
This increase is a result of the government's Superannuation Guarantee (SG) program gradually increasing 0.5% each year until it reaches 12% in 2025.
The government has argued that the increase is necessary to help Australians save more for retirement, particularly given the aging population and the fact that many workers may not have saved enough to support themselves in their later years.
The increase is also expected to help reduce the burden on the government's pension system, as more Australians will have sufficient savings to support themselves in retirement. This is important given that the number of Australians aged 65 and over is projected to double by 2057, placing significant strain on the government's finances.
What This means for Employers
If you currently employee any staff you must review your payroll software and ensure that the increase is effective from the first pay cycle from July 1 2023. Failure to correctly calculate and pay the correct contributions could result in penalties from the ATO. If you are unsure if your software is set up correctly or if the change is going to happen automatically please contact us and we will be able to advise you how to check based on the software you are using.
What This Means for Employee
If you're an employee, the increase in superannuation payments will mean that you'll be receiving a slightly larger percentage of your salary in retirement savings. For example, if you're currently earning $60,000 per year, your employer's superannuation contributions will increase from $6,300 per year to $6,600 per year.
While this may not seem like a significant increase, it can add up over time, particularly when you consider the compounding effect of savings. It's also worth noting that the increase will be phased in gradually, with the contribution rate rising by 0.5% each year from 1 July 2021 until it reaches 12% in 2025.
What Should You Do?
Ensure you check your first payslip issued after July 1 2023 to make sure the super increase has been calculated correctly and contact your employer if it has not.
It's also a good idea to review your superannuation fund to ensure that it's still the best option for you. There are a range of different superannuation funds available, each with different investment options, fees, and features, so it's important to choose one that suits your needs.
