Australia’s Superannuation Guarantee Changes

What is the current super rate?

Under Australia’s Superannuation Guarantee laws, employers are normally required to pay the equivalent of 11.5% of ordinary time earnings in FY2024/25. Because of a concern that this will still leave many retirees too reliant on the age pension, the Parliament legislated an increase of the percentage to 12% by 2025. 

Why the rise?

Increases in the super guarantee have been discussed and implemented for almost as long as compulsory super has been around. Back in 1995, just three years after compulsory superannuation was introduced, economists were already warning that super contributions at current rates were likely to leave employees with insufficient super for a comfortable, independent income by the time they retire. In recent years, it has been generally accepted by governments that the super guarantee would need to be raised to 12% in order to meet the basic needs of Australian retirees in the future.

How much difference will it make?

Due to the wonders of compound interest, over time, the small 0.5% change in statutory super contributions can make a huge difference to your retirement income by adding thousands of dollars to your super balance.

Who qualifies for the superannuation guarantee?

All full-time, part-time and casual employees over 18 years of age are eligible for super guarantee contributions, or SGC. Employees under 18 years and private domestic workers (such as nannies) who work more than 30 hours a week are also eligible. Even certain contractors may be deemed to be eligible.

Many years ago, employees lost their eligibility when they reached a certain age, but this has been removed and there is no upper age limit.

Is there a limit on how much super guarantee is compulsory?

Yes there is, but it only applies to if you earn more than $260,280 per year. For the 2024 – 2025 financial year, the maximum super guarantee contribution that an employer must pay is increased to 11.5% of $260,280 per year, or $29,932.20.