The Government’s Henry Tax Review has had some dramatic changes for Superannuation recently.
For instance, the minimum superannuation contribution from employers will go from 9% to 12% within the next 7-8 years.
With this superannuation guarantee increase to 12%, who will front the costs?
What does this mean for you?
Do you currently get paid a package at work that is inclusive of super? Many people have asked us;
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With the changes to superannuation, who will pay the extra 3% superannuation requirement? Will it be taken out of my salary or will my employer have to pay me more (technically).
This means that people are concerned about whether they will have less take home pay when these new rules are introduced.
So who will pay the 12% super guarantee increase?
It appears that employers will be obligated to pay the additional contributions in super (extra 3%). This means that regardless of whether your contract states your pay is inclusive or exclusive of super, the company will pay it for you.
This means you won’t have a cut in take home pay and you will be technically getting a 3% pay rise into forced super savings.
Not bad hey?
When do the super changes take place?
It has been noted that the full 3% increase in forced super savings won’t actually come into play until 2019. In the mean time however, there will be minor increases as follows:
- 2013 – 2014 = 0.25 per cent super increase
- 2014 – 2015 = 0.25 per cent super increase
- 2015 – 2019 = 0.50 per cent super increase until 2019
Why is this change occurring?
Did you know that compulsory superannuation only took place in 1992? This means many people are without any strong superannuation and will have a miserable retirement unless they start to focus on filling that super account.
The changes from 9% to 12% are estimated to create an extra $85 billion in superannuation savings over the next 10 years.
That is a lot of games of bingo in retirement!