You’re about to get more super. Here’s all you need to know

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You’re about to get more super. Here’s all you need to know

With the start of July heralding a new financial year, workers across the country can expect to see their super balances increase thanks to a legislated boost to the super guarantee.

The guarantee, which is the minimum amount employers must pay into their employees super fund, has increased from 11.5 per cent to 12 per cent, giving the average worker hundreds of dollars more in super contributions a year.

The superannuation increase also applies to Commonwealth Parental Leave Pay.

The superannuation increase also applies to Commonwealth Parental Leave Pay.Credit: Dominic Lorrimer

This latest increase marks the end of years of incremental increases to the minimum super contribution requirement from 9 per cent to 12 per cent after it was legislated back in 2012.

This is the final scheduled increase mandated by the Australian Taxation Office, which must be paid quarterly, although it can be paid more often.

This month also marks the time when superannuation payments must be included in the government’s Parental Leave Pay scheme. The superannuation increase also applies to Commonwealth Parental Leave Pay, benefiting millions of Australians. It will narrow the gender super gap by around a quarter, which is about $50,000 for Australians nearing retirement.

What do I need to do?

Check your next payslip to ensure that the new rate has been applied to the superannuation your employer has paid on your behalf into your super fund. To get the most out of the extra payments, make sure you consolidate your super into one fund to avoid paying extra fees.

Also, take a moment to check how much you’re paying in fees to your super fund, compare its performance to see if it’s holding back your super compared to other funds, and check your fund is the best fit for your age and retirement goals.

The increase could make a substantial difference to retirement savings in the long run, according to CPA Australia’s Superannuation Lead, Richard Webb.

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“For a young person on $60,000 a year, the increase translates to an extra $300 in their super every 12 months. But depending on investments and fees, the cumulative effect of that increase could ultimately be worth thousands by the time they retire,” he says.

While the increase will have a positive long-term benefit to retirement savings, Webb reminds workers to check if their employer is making the extra contribution, or whether it comes out of their total remuneration package.

“If your employment contract includes a total remuneration package including super, this could mean less take-home pay at the end of the month. However, for those on award or enterprise agreements, your pay is more likely to be a salary, which means the change will not affect your take-home pay,” Webb says.

He recommends checking with your employer to see how they view the changes and what it means for you. Otherwise, you might get a shock if your take-home pay is less than expected.

“With the super balance guarantee increase to 12 per cent, we are seeing super fulfil its objective of providing a dignified retirement for ordinary Australians, with today’s 30-year-olds reaping the rewards of decades of progress in our super system,” Webb says.

Will it be enough?

The best way to see if you’re on track to have enough in your super to fund a comfortable retirement is to use an online calculator to check based on your age and super savings if you should be topping up your balance to take advantage of the wonders of compound interest.

“There are no more legislated increases to the Superannuation Guarantee, so it’s up to individuals to take control of their super and make sure they are getting the most from their money. This includes making sure the investment and insurance options within the fund are appropriate,” Webb says.

  • Advice given in this article is general in nature and not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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