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The Superannuation Guarantee Changes: A Blessing or Curse?

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Australian Government Superannuation Guarantee Changes
Is paying more super good for business?

From 1 July this year, Australia’s compulsory superannuation guarantee is about the get a much-needed boost: an increase from 9% to 9.25% and will continue to rise incrementally to 12 percent by 2019-2020.

There are currently 3 million Australians aged over 65 — a figure expected to increase to 8.1 million by 2050, a report commissioned by the Rudd Government highlighted in 2010.

The report also estimated that by 2050 the ratio of working-age people in Australia compared to those aged 65 years and over would drop markedly from 5:1 to 2.7:1.

By increasing compulsory superannuation contributions to 12%, an aggregate $500 billion will be added to the existing pool of superannuation savings by 2050.

Are the Super Guarantee Changes Good for Business?

For business-owners, this means that from 1 July you must increase the amount you pay into your employees’ superannuation to 9.25%.

While on the surface, the increase to compulsory super contributions seems like a great coup for employees, it’s also drawn much criticism.

Unlike the Paid Parental Leave Scheme, the Government has no involvement in this super scheme, so businesses won’t receive any form of assistance from the Government when the superannuation guarantee changes take effect.

For a business that spends $1 million on salaries, wearing the 0.25 percent increase will add an additional $2,500 to their super contributions, which would grow by another $2,500 come 2014, assuming their wage bill remained at $1 million.

Detractors fear that employers will forgo giving their staff a pay rise to meet the increase to super contributions instead. And for low-income earners, the boost to their superannuation — a pool of money they cannot access until retirement-age — probably won’t offset the loss of a pay rise.


But making changes to the superannuation guarantee in order to increase the pool of money for Australia’s future would certainly seem to be a wise investment; after all, we’ve earned an international reputation for our innovative approach to retirement income that countries the world over are emulating.

For more information on how changes to the superannuation guarantee affects you you can visit the ATO website or the Future Tax Website.

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