The superannuation guarantee is an important part of the superannuation system. It was introduced on 1 July 1992 to increase the financial security of Australians once they are no longer working. Its aim is to provide funding for Australians in retirement, so that fewer people have to rely solely on the Government Age Pension as a source of income.
The superannuation guarantee, or SG, dictates the minimum percentage of your earnings your employer needs to pay into your super fund. The Australian Government controls and legislates the super guarantee.
What is the SG rate?
From 1 July 2022 the SG is 10.5% p.a.
The super rate is due to increase a further 0.5% each year until it reaches 12% in 2025. These increases have been legislated by the Australian Government.
The superannuation guarantee increase is planned as:
|
Date |
Raised SG |
Increase from 9.5% |
|
1 July 2021 |
10% |
+ 0.5% |
|
1 July 2022 |
10.5% |
+ 1% |
|
1 July 2023 |
11% |
+ 1.5% |
|
1 July 2024 |
11.5% |
+ 2% |
|
1 July 2025 |
12% |
+ 2.5% |
Increasing the SG rate will mean Australians accumulate more super over their working lives, increasing the likelihood of a comfortable retirement. While such a small increase may not sound like much – over time, it could have a big impact on your retirement savings.
See how you’re tracking for retirement and if you need to make changes using our Retirement forecaster.
Does my employer have to pay the 10.5% SG rate?
Yes, your employer must pay the 10.5% SG rate, provided you’re entitled to receive compulsory super contributions. Generally, your employer must pay you super if you’re: 18 years old or over, or under 18 years and working more than 30 hours a week.
It applies whether you’re full-time, part-time, casual or contracting. It also applies if you’re a domestic or private worker who works more than 30 hours a week.
If you’re unsure about eligibility, the ATO has tools for both workers and employers to determine when the SG rate needs to be paid.
Other ways to grow your super
Consolidating your super by bringing it together in one place can be one of the most effective ways to grow your super, by no longer paying multiple fees and potentially multiple insurance premiums.
Making extra super contributions
SG contributions alone may not be enough to allow you to retire comfortably. Your employer may already be contributing to your super account, but you might be thinking of adding a little more, because even small additional amounts, into your super today, can make a big difference down the track. And by contributing more, you may even end up paying less income tax.
Our on-demand webinar, Growing your super, can help you understand the various contribution strategies and their potential benefits.
Each contribution type has different features and benefits, and how they may fit with your personal circumstances and financial commitments also differs. You can also keep reading on our website to discover other ways to grow your super.
By coupling consistent contributions with strategic investment choices and compound interest, your super can grow significantly over many years.
The growth of your super
Once contributions are received, your super fund then invests your money in assets like shares and property to help grow your balance over time. The amount of super you’ll end up with when you retire depends on several factors, including how much you contributed, how long you’ve been contributing for and your investment returns.
Reflecting our commitment to help our members retire with confidence, the MLC’s MySuper Growth Portfolio is one of the top performing MySuper products for its one and three-year return to June 2022.1 See how MLC stacks up when it comes to important factors likes performance.
Important things to consider
SG contributions count, along with certain other amounts, towards your concessional contribution cap and penalties may apply if the cap is exceeded.
If you want to make additional pre-tax super contributions, consider salary sacrifice or personal deductible contributions.
You may also want to make post-tax (or after tax contributions), known as non-concessional contributions to boost your retirement savings. These contributions count towards your non-concessional contribution cap and penalties may apply if the cap is exceeded.
1 MLC MySuper Growth Portfolio option compared to the SuperRatings Fund Crediting Rate Survey – SR50 MySuper Index to June 2022.
Important information and disclaimer
This article has been prepared by NULIS Nominees (Australia) Limited ABN 80 008 515 633 AFSL 236465 (NULIS) as trustee of the MLC Super Fund ABN 70 732 426 024. NULIS is part of the group of companies comprising Insignia Financial Ltd ABN 49 100 103 722 and its related bodies corporate (‘Insignia Financial Group’). The information in this article is current as at September 2022 and may be subject to change. This information may constitute general advice. The information in this article is general in nature and does not take into account your personal objectives, financial situation or needs. You should consider obtaining independent advice before making any financial decisions based on this information. You should not rely on this article to determine your personal tax obligations. Please consult a registered tax agent for this purpose. Opinions constitute our judgement at the time of issue. The case study examples (if any) provided in this article have been included for illustrative purposes only and should not be relied upon for decision making. Subject to terms implied by law and which cannot be excluded, neither NULIS nor any member of the Insignia Financial Group accept responsibility for any loss or liability incurred by you in respect of any error, omission or misrepresentation in the information in this communication.