Posted on 01/07/2021
Opinion editorial by Tony D'Alessandro
Over the coming weeks and months, South Australian workers might notice a slight increase in the superannuation contribution their employer makes on their behalf into their fund of choice.
As South Australia’s local industry super fund, we welcome the introduction of Federal legislation mandating an increase in the employer contribution from 9.5 per cent of a person’s salary to 10 per cent, today. This is just the first step in the increases that will take superannuation contributions to 12 per cent by 2025.
For the average South Australian earning a salary of roughly $66,000, the increase equates to an extra $330 in super a year, or $6.35 each week. This could rise to $1,650 per year by 2025, when the last of the annual .5 per cent annual increases kick in.
Having this additional money working for us until we retire could make a significant difference to the way we live in retirement. We’ve advocated for this increase, with the understanding of the benefits it will bring to the retirement outcomes of our members.
Sadly, many people don’t have enough superannuation. Whether it’s because they’ve worked part-time, been unemployed, taken time out to raise children, care for a family member or chosen not to work, their balances won’t be as high as those who have worked full-time, throughout their life.
This disadvantage has been exacerbated by the current minimum threshold of $450 per month earnings, under which employers do not need to pay superannuation.
Many women fall into that category.
As a Chief for Gender Equity, I have hope. This threshold will be abandoned by 1 July 2022, and at least 220,000 more women will be on a journey to a dignified retirement.
Over the past few weeks there has been a lot of passionate and ideological debate in parliament around superannuation. No system is perfect, but ours is one of the best.
The Australian scheme was last year ranked fourth best in the world behind the Netherlands, Denmark and Israel.
Collectively, our super wealth is over $3.1 trillion. Most of that will go straight back into the Australian economy. Here at Statewide Super, we’re investing in the future of South Australia and we’re significant shareholders in the state’s key infrastructure assets like Adelaide Airport and Flinders Ports.
The increase in contributions is great news – but it has been disappointing to hear misleading reports that we’ll all end up with less cash in our pockets at the end of the week. For most people, our salaries are unlikely to change.
If your employer – government or private sector – pays you a salary plus superannuation, then your base salary will stay the same and the contributions will increase.
Only those whose superannuation is included in their salary as part of a package will notice the difference, with their base salary likely to drop slightly. For those on award wages, their salary cannot drop below the award rate.
My best advice would be to check with your employer what it will mean for you, so there are no surprises from 1 July. But most of all, let’s celebrate the contribution increases, set to help more Australians live better in retirement.
Photo: Mike Burton / Newspix