Super Guarantee Set to Increase
Australian workers will receive higher retirement savings as the superannuation guarantee rises to 12% from 1 July. The change marks the final step in a decade-long increase to the employer contribution rate, legislated under the Rudd-Gillard government in 2012.
Incremental Growth Reaches Target
The employer contribution rate will increase from 11.5% to 12%. The original rate stood at 9% before a series of scheduled rises began. The increase will benefit millions of workers across Australia by adding thousands to their retirement savings.
Impact on Workers’ Superannuation
According to the Association of Superannuation Funds of Australia, a 30-year-old earning $60,000 annually could gain $20,000 by retirement. The increase adds about $300 per year for a worker earning $60,000 and $500 annually for someone earning $100,000.
Foundation for Secure Retirement
“The system foundations are cemented for young, working people to have a comfortable retirement,” ASFA chief executive Mary Delahunty said. “It’s a moment all Australians should be proud of.”
Super Funds Grow as Costs Rise
ASFA reported that the cost of a comfortable retirement rose 1.6% in the past year. The cost of a modest retirement increased by 1.7% over the same period. These increases remain below the national inflation rate of 2.4%.
Annual Retirement Spending Estimates
Couples need $73,900 annually for a comfortable retirement, while singles need $52,300, according to ASFA. For a modest retirement, couples require $48,200 and singles $33,400 each year. Couples who rent need $64,250 annually, while singles renting need $46,660.
Renters Face Additional Pressure
Delahunty highlighted the figures reflect growing pressure on retiree budgets. She also stressed the need to increase Australia’s housing stock. “They also illustrate how super can be the difference between hardship and stability later in life, especially for renters,” she said.
Impacts on Pay Packages
Richard Webb from CPA Australia advised workers to confirm how the increase affects their income. “It’s a good idea to check with your employer to see how they view the changes and what it means for you,” he said.
Take-Home Pay May Shift
Employees on total remuneration packages may see slight reductions in take-home pay. In contrast, workers on award or enterprise agreements will likely receive the super increase on top of current earnings.
Super System Shows Broad Reach
Only 10% of retirees cited superannuation as an income source when it began in 1992. Today, nine in ten Australians aged between 30 and 50 have super accounts. The policy was originally designed to reduce reliance on the age pension.
Government Spending Set to Decline
Despite a projected doubling of the population aged over 65 and a trebling of over-85s, age pension spending will drop. Treasury forecasts show a fall from 2.3% of GDP in 2020 to 2.0% by 2062-63.
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Structural Gaps Remain
Xavier O’Halloran from Super Consumers Australia noted the increase will not support all Australians equally. “(For) people who have caring responsibilities or who have been locked out of the unaffordable housing market … increasing SG further won’t address those inequalities,” he said.
Call for Better Retirement Products
O’Halloran emphasised the lack of standards and testing for retirement products. “Right now, there are no minimum standards for retirement products like there are for MySuper,” he said. “There is also no performance testing of retirement products, so super funds can still sell poor products.”
Broader Support Measures Suggested
He stated more can be done to assist those struggling in retirement. Many Australians accumulate most retirement savings late in their working lives. Targeted reforms could improve outcomes for disadvantaged groups, including renters and unpaid carers.
Policy Continues to Evolve
The rise to 12% marks a major milestone in Australia’s superannuation system. The shift ensures that more Australians accumulate savings to support rising retirement costs. While welcomed by many, experts urge further reform to ensure equity and transparency.
