Australia’s superannuation system is undergoing a significant shift, with over 12 million workers set to benefit from substantial boosts to their retirement savings.
Starting July 1, employers will be required to pay a 12% super contribution, up from the current 11.5%. This marks the fifth and final increase in a series of reforms initiated in 2021 aimed at improving the financial security of Australians in retirement.
According to Sky News, the increase is expected to provide long-term benefits to workers, though many remain unaware of the imminent changes that will take effect in just a few weeks. These adjustments could prove crucial for future financial stability.
Key Changes to the Superannuation System
These adjustments are part of the government’s effort to secure better retirement outcomes for workers. By increasing the super contributions, Australian workers will see a direct increase in their retirement savings.
For instance, new research from the Association of Superannuation Funds of Australia (ASFA) forecasts that a 30-year-old with a super balance of $30,000 and a median wage of $75,000 will likely accumulate $610,000 by age 67, thanks to these changes.
This is a result of workers entering the workforce now receiving higher contributions for a longer period compared to those in earlier generations.
SMC’s Viewpoint on the Changes
Misha Schubert, Chief Executive of the Super Members Council (SMC), emphasized the significance of these changes:
This increase to people’s super is a powerful step forward for Australians’ financial futures – she said.
Too many people don’t yet know it’s happening.
This highlights the concern that many workers remain unaware of the imminent adjustments to their superannuation, which could impact their long-term financial security.
How Will the Changes Affect Workers?
The increase in superannuation payments will vary depending on salary. For example:
- A person earning $60,000 will see their super contributions rise from $6,900 to $7,200.
- A person on a $150,000 salary will receive $18,000 in super, up from $17,250.
- Those earning $200,000 annually will see their super contributions grow from $23,000 to $24,000.
While the hike is beneficial for many, it also introduces challenges. Workers who have super contributions included in their salary will experience a reduction in their take-home pay to account for the increased super payments. Additionally, those who salary sacrifice into their super accounts may face additional taxes and levies if they exceed the $30,000 concessional contributions cap.
Superannuation Balances by Age and Gender
Data from the Australian Bureau of Statistics reveals a disparity in superannuation balances, particularly between men and women.
For workers aged 60 to 64, the median super balance for men is $205,000, while women in the same age group hold only $154,000.
This highlights the ongoing gender gap in retirement savings, making it a point of concern for future reforms.
The new superannuation changes are set to significantly improve retirement outcomes for many Australian workers.
However, the Australian Superannuation Funds Association (ASFA) suggests that a super balance of at least $595,000 is necessary for an individual to experience a comfortable retirement, while a couple would need around $690,000.
