Australia Increases Superannuation Guarantee Contribution Rate
In Australia, employers are required to pay a percentage of an employee’s earnings into superannuation to help save for retirement. This is referred to as Super Guarantee (SG) contributions and is categorized as a pre-tax or concessional contribution. Since 2020, the SG rate has increased by 0.5% every financial year, growing from 9.5% to 11% as of this financial year. Moving forward, further increases of 0.5% in the next two financial years are due, causing the final SG rate to reach 12% in 2025. Employers have implemented these changes in three ways:
- Increasing contributions on top of the employee’s existing salary, thereby increasing cost to the company. This is common for employees on a salary-plus superannuation arrangement.
- Increasing contributions by deducting from the employee’s existing salary, thereby retaining cost to the company. This is less common and only possible for employees on a total remuneration package arrangement.
- Electing to pay above the minimum SG, for example, increasing to 12% in previous years, thereby retaining cost to the company. This is common in the public sector or those in the private sector in competitive industries.
Employers are not required to pay superannuation on earnings above the maximum superannuation contribution base ($62,270 per quarter). Due to the increased SG rate, the current maximum superannuation contribution is $6,849 per quarter.
You can learn more about Australia’s superannuation thresholds here.
This article about Australia increasing its superannuation guarantee contribution rate is provided by CA Financial, Asinta’s benefits consulting Partner in the country. If you need support with your employee benefits in Australia, please contact Asinta, and we will put you in touch with the local experts at CA Financial.