Make sure you are prepared for the changes coming to Superannuation.

Compulsory Superannuation Contribution is set to increase, are you prepared?

Under the Superannuation Guarantee (Administration) Act 1992, employers have been required to make Super Guarantee Contributions (‘SGC’) to eligible employees at a minimum rate of 9.5% of their ordinary time earnings (OTE).

Changes to the above legislation were previously announced in May 2020 as a part of the Federal Budget for 2020-21 (Your Future, Your Super) and was later assented to.

What has changed?

From 1 July 2021, the SGC rate will be increased by 0.5%, to 10%. In addition, under the legislation there will be subsequent 0.5% increases every year until 1 July 2025, which will eventually bring the SG rate to 12% from the period starting 1 July 2025.

Employers are therefore required to take appropriate measures to implement this change in their business and payroll.

What do I need to do?

  • Double check with your payroll provider and make sure they are prepared for the increase to SGCs, effective 1 July 2021,
  • Check current employment contract clauses in relation to SGC (i.e. update fixed contribution at 9.5%, or amend or adjust salary sacrifice arrangements where appropriate),
  • Review applicable industrial instruments (i.e. Enterprise Agreement whether it stipulates SGC 9.5% or changes in accordance with the legislation, although the instrument cannot override minimum SG contributions),
  • Inform all current eligible employees about the upcoming changes to their SG contributions.

Note: keep an eye out for further updates from ER Strategies in relation to more Super-related changes in the coming months, such as the recently announced removal of the $450 monthly SGC threshold for all employees, which won’t come into effect until 1/7/22.

Getting Our Help 

If you have any questions regarding the changes, or if you are unsure what to do, we encourage you to call ER Strategies on 1300 55 66 37.

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