There are some important changes to superannuation coming. Some come into effect at the beginning of the new financial year. Here is what you need to know.
Superannuation Guarantee increases to 10%
The Superannuation Guarantee (SG) rate will rise from 9.5% to 10% on 1 July 2021 and will then steadily increase by 0.5% each year until it reaches 12% on 1 July 2025.
If you have employees, what this will mean depends on your employment agreements. If the employment agreement states the employee is paid on a ‘total remuneration’ basis (base plus SG and any other allowances), then their take home pay might be reduced by 0.5%. That is, a greater percentage of their total remuneration will be directed to their superannuation fund. For employees paid a rate plus superannuation, then their take home pay will remain the same and the 0.5% increase will be added to their SG payments.
New ‘stapled’ superannuation employer obligations for new staff
Currently, when an employer hires a new staff member, the employee is provided with a Choice of Fund form to identify where they want their superannuation to be directed. If the employee does not identify a fund, the employer directs their superannuation into a default fund.
From 1 July 2021, where an employee does not identify a fund, employers will not simply be able to set up a default fund, but instead will be required to request that the ATO identify the employee’s stapled fund. If the ATO confirms no other fund exists for the employee, contributions can be directed to the employer’s default fund or a fund specified under a workplace determination or an enterprise agreement (if the determination was made before 1 January 2021).
Legislation enabling this measure is currently before the Senate. We will advise you if and when this change comes to fruition.