What Is the Superannuation Guarantee?
The Superannuation Guarantee, commonly known as SG for short, is a percentage of a salary or wage which employers are legally required to pay into their employee’s superfund. This percentage is controlled and legislated by the Australian Government.
Employers must pay superannuation contributions for:
- Employees 18 years and older who earn $450 or more before tax each calendar month; and/or
- Employees under 18 years working a total of over 30 hours per week who earn $450 or more before tax each calendar month.
When first introduced in July 1992, the SG rate was set at 3% and in the preceding 10 years it rose to 9%. The SG rate has only risen by 0.5% over the past 18 years since then, bringing the current rate to 9.5%.
So what’s changing?
In 2013, the Australian Government announced a yearly increase in the SG Rate starting from the 1st of July 2021. From this date, a half percent increase will occur yearly until the rate has reached 12% in 2025.
Superannuation Guarantee Rate
1 July 2021 – 30 June 2022
1 July 2022 – 30 June 2023
1 July 2023 – 30 June 2024
1 July 2024 – 30 June 2025
1 July 2025 – Onwards
It is important that employers start budgeting for these changes, as salaries cannot be reduced to cater for these increases.
So remember – As of 1 July 2021 the Superannuation Guarantee increases to 10%.
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