Australia’s retirement savings system has undergone a notable change as of July 1, with the superannuation guarantee—the minimum amount employers must contribute to their employees’ retirement funds—increasing to 12%.
This adjustment marks the final phase of a gradual increase that began in 2021, aimed at boosting the financial security of millions of working Australians over the long term.
The rise in super contributions coincides with new tax measures targeting high-balance super accounts, reflecting the government’s efforts to ensure the system remains fair and sustainable.
Together, these changes represent a significant shift in Australia’s retirement landscape, with immediate implications for millions of workers and important consequences for the nation’s broader economic wellbeing.
Increase in Superannuation Guarantee Signals a Final Step in a Phased Policy
The superannuation guarantee, which mandates the minimum percentage of an employee’s salary that employers must contribute to retirement savings, increased to 12% on July 1, according to official government guidelines.Â
This adjustment represents the fifth and concluding phase of a policy initially rolled out in 2021 with the goal of gradually enhancing retirement savings for Australians.
The policy is designed to ensure that Australians accumulate more funds during their working lives to support a financially secure retirement. According to Misha Schubert, chief executive of the Super Members Council, this increase “is a powerful step forward for Australians’ financial futures.”Â
However, Schubert also highlighted a concerning lack of awareness, stating that “too many people don’t yet know it’s happening.”
Efforts to raise public knowledge include educational campaigns such as videos released by the Super Members Council, which aim to encourage Australians to engage more actively with their superannuation.
Greater understanding can lead to behaviours like comparing fees, checking investment options, and making additional contributions, which can further improve retirement outcomes.
Tax Changes for High-Balance Super Accounts Come Into Effect Simultaneously
Alongside the rise in the superannuation guarantee, the federal government is introducing a new concessional tax rate on earnings for super balances exceeding $3 million. This change will affect approximately 80,000 Australians, representing around 0.5% of all super account holders.
The tax adjustment targets the earnings on these high super balances, reflecting a shift to ensure the superannuation system remains equitable and sustainable. It is part of broader reforms aimed at balancing support for the majority of Australians while addressing the concentration of retirement savings among the wealthiest.
According to the Super Members Council, increased engagement with superannuation can have significant positive impacts on retirement preparedness and financial wellbeing.
