More money goes towards your super
The Super Guarantee (SG) (the compulsory amount employers must pay into a workers’ super fund) increased from 9.25 per cent to 9.5 per cent on 1 July 2014. It is scheduled to increase to 10 per cent on 1 July 2021 and will reach 12 per cent on 1 July 2025.
Who paid for the increase?
The increase in the SG may be taken into account during normal negotiations about people’s wages. This means if you or your union negotiated an annual pay increase of 3 per cent in 2014-15, 2.75 per cent of that may have been directed towards your take home pay and 0.25 per cent may have gone into your super.
If you are not covered by a wage agreement that explicitly takes into account the additional increase in the SG, then whether or not your take home pay is affected will depend on how your pay is set.
If your conditions of employment are set out in a written contract with your employer, check what the contract says about the amount of your superannuation contributions and wages. For example, the contract might say that the employer will pay SG contributions, along with a wage of a set amount. Or it might say what the total remuneration (salary plus super) amount is, and that the SG amount currently will be paid out of the total amount and the remainder paid to you as salary.
Around 15 per cent of employees are paid at the rate set by the industrial award that covers them. Around 40 per cent of employees have their pay set by a collective agreement. In each of these cases, until the award or agreement is formally reviewed, employers generally have to continue to pay wages at the rate set in the relevant award or agreement rate. They are not able to reduce wages to offset the cost of an increase in the SG contributions.
For the 45 per cent of employees whose wages are not set by an award or collective agreement, they will need to negotiate with their employer.
What about people who have a salary package deal?
If your contract of employment is one where you agreed to a total salary package (that is a package of salary plus super), then your employer may reduce your take-home salary by the increase in the SG, in keeping with the agreement to pay no more than the total package.
When you renegotiate your salary, an increase in the SG contributions that is scheduled is something that will need to be taken into account.
For some workers, this may mean a slight decrease in their take home pay, compared to what they would normally get. For example, a worker on a total salary package deal (a salary package including super) earning $60,000 a year in 2014-15 would have received $2.88 less in their take home pay each week, because an extra 0.25 per cent of their existing package went into their super fund.
What about people on a contract?
Contractors who are eligible for SG are also entitled to the increase. But the terms of their contract will determine how the SG is to be paid. See the “Who will pay for the increase?” section above for more information.
What can I do to make sure my employer is paying the increased amount?
Having a chat to your employer is the best way to find out how an increase in your super is paid. If you are still unsure that it is being paid correctly, check with your super fund. If your employer isn’t paying a required increase, you can speak to the Australian Tax Office about it by calling 13 10 20.