With the announcement of the 2021 Budget, changes have been made to the compulsory superannuation system implemented by the Australian government. Currently employers are required to pay 9.5% of ordinary time earnings up to 30 June 2021, but Parliament legislated a gradual increase to 12% by 2025.
|Period||Super guarantee rate|
|1 July 2021 – 30 June 2022||10.00%|
|1 July 2022 – 30 June 2023||10.50%|
|1 July 2023 – 30 June 2024||11.00%|
|1 July 2024 – 30 June 2025||11.50%|
|1 July 2025 – 30 June 2026 and onwards||12.00%|
The main aim of the reform is to save and increase the amount of retirement savings Australians have by various methods, with an estimated increase in retirement savings by $10.7 billion over the next 10 years.
Further super changes include:
Stapling the Superfund to the individual
To avoid creation of multiple superfund accounts every time an employee changes job, Employers can obtain employee’s super details on ATO online services.
“Superannuation account stapling means no more duplicate fees and duplicate insurance, creating a huge saving for people over their life times.”
Super administrators are required to provide information on how money is managed and invested in the Fund. This forces them to be more transparent about having the client’s best financial interest at heart.
The ATO are developing systems the enable employees to compare superannuation products. The tool provides a table of MySuper products within the YourSuper portal, which is then ranked by fees and investment returns as well as showing an individual’s current super account. There will be a prompt which will allow an individual to consolidate accounts if they have multiple funds.
Super Transfer Balance Cap
From 1 July 2021, transfer balance cap will increase from $1.6 million to $1.7 million due to indexation. Further information will be available closer to the date.
If you have any questions on how these legislative changes may affect you, please do not hesitate to contact us directly.