Superannuation Guarantee increase to 12 per cent set to give Australians thousands more in retirement boost
The Superannuation Guarantee — the minimum amount your employer is legally required to pay towards your super every year — will increase from July 1.
The guarantee is currently at 11.5 per cent of your annual earnings, but will jump to 12 per cent in the new financial year.
A 30-year-old worker earning $75,000 a year is set to be $20,000 better off when they retire, the Association of Superannuation Funds of Australia (ASFA) calculates.
It means that the worker will retire with $610,000 in super savings, $15,000 above what a single homeowner needs for a comfortable retirement that includes a budget for top level health insurance, a reasonable car that is maintained, regular leisure activities and holidays, and the confidence to use air conditioning and other utilities.
It is the 'first time' ASFA has projected that a 30-year-old on a median wage will be on track to achieve that standard of living when they leave the workforce.
'This is a major milestone in Australia's retirement system,' association chief executive Mary Delahunty said.
'With the super guarantee increase to 12 per cent, we are seeing super fulfil its objective of providing a dignified retirement for ordinary Australians.'
Check your pay slip
CPA Australia's superannuation lead Richard Webb said the increase 'could ultimately be worth thousands' by retirement, but workers should have a word with their employer before the new financial year.
'If your employment contract includes a total remuneration package including super, this could mean less take-home pay at the end of the month,' Webb said.
'However, for those on award or enterprise agreements, your pay agreement is more likely to be a salary, which means the change will not affect your take-home pay.
'It's a good idea to check with your employer to see how they view the changes and what it means for you.
'Otherwise, you might get a shock if your take-home pay is a little less than expected.'
Costs in retirement
ASFA's latest Retirement Standard benchmark found the cost of funding a comfortable retirement had increased 1.6 per cent in the last year, with most homeowning couples needing $73,875 annually and most singles who own a dwelling needing $52,383.
Single renters aged 65 need about $46,663 annually for a modest retirement, while couples leasing their home need about $64,259.
The super lump sum needed for a modest standard of living (basic health insurance, a cheaper car, infrequent leisure activities, bill watching and utility sacrifices, and limited meals at restaurants) is $340,000 for a single person renting privately and $385,000 for a couple.
'These new figures demonstrate how important it is that we build more homes in this country so Australians can buy a house or an apartment,' Delahunty said.
'They also illustrate how super can be the difference between hardship and stability later in life, especially for renters, which is why we need to keep it safe for retirement.'
The association said that overall inflation pressures had eased, budgets were being stretched by increases in fruit and vegetables (6.6 per cent), meat and seafood (4.3 per cent) and electricity prices.
'Australians in retirement are starting to benefit from a slowdown in inflation, but the prices of essentials are still rising,' Delahunty said.
'It's a timely reminder that achieving a dignified retirement takes planning, and superannuation plays a critical role in making that possible.'
The Super Members Council said the guarantee boost will help cover bills, trips away and financial security.
'More super means more freedom, more choices and more opportunities to do the things you love,' council chief executive Misha Schubert said.
Super health check
Australia's super guarantee was introduced in 1992. At the time, the mandatory contribution rate was just 3 per cent.
With July marking the final legislated increase to the SG since 2021, Webb said it is important for Australians to ensure they are in control of the super (you can find more super tips here).
'It's never too late to look into growing your retirement savings, including making additional contributions to your fund before the end of the financial year,' Webb said.
And, with the , it could also be time to take a look at what you might be missing out on.
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