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Changes To Superannuation You Need To Know

Changes To Superannuation You Need To Know

The new financial year is here, and a number of things have changed in superannuation.

Here’s what you need to know for 2021/22.

Increase to superannuation guarantee rate

The superannuation guarantee is the mandated amount that employers must contribute to their workers’ retirement savings. On 1 July 2021, the superannuation guarantee (SG) rate increased from 9.5% to 10%.

(It will continue to rise by 0.5% a year until it reaches 12% in 2025.)

This means that the average 30-year-old worker is set to pocket an extra $80,000 to $100,000 in super, and that equates to about an extra $6 a week.

The downside is that some workers will get a pay cut, with employers dipping into their base salary to make up the difference. For example if you earn ‘total remuneration’ package (base salary, SG, and any other allowances) of say $80,000 per annum, including superannuation, your take-home pay will be less.

If you earn a base salary of $80,000 plus SG there will be no change to your take-home pay and you will receive an extra $400 per annum in employer contributions!

Your super fund will follow you if you change jobs

From 1 July 2021, employees will keep their current super fund if they change jobs. This is designed to help reduce unintended multiple accounts from being opened by new employers. It will help reduce employees’ super paperwork and fees, make it easier for them to track their super, and help them avoid paying multiple insurance premiums.

Contribution Caps Increased

There are limits as to how much you can contribute to super.

  • Concessional contributions are those made with before-tax money i.e. salary sacrifice and personal deductible contributions. The annual cap increased from $25,000 to $27,500.
  • Non-concessional contributions are those made with after-tax money (no tax deduction is claimed). The annual cap increased from $100,000 to $110,000. The three year bring-forward non-concessional cap increased from $300,000 to $330,000 for people under 65.

Minimum monthly income threshold removed

The $450 minimum monthly income threshold was removed, meaning all workers, regardless of how much they earn, will be entitled to receive employer SG contributions. This is the rule that stopped workers who earn less than $450 per month from receiving SG contributions and was the threshold that caused almost twice as many women as men to miss out on receiving employer super contributions when working in insecure, part-time jobs.

The proposed start date is 1 July 2022.

Higher limits for the FHSSS

The maximum withdrawal from the First Home Super Saver Scheme (FHSSS) will increase from $30,000 to $50,000. This scheme allows people to make voluntary contributions to super to save for their first home. The cap on these contributions was $15,000 per annum and $30,000 in total.

Under the proposed changes, voluntary contributions into a super fund will be allowed by a post-tax contribution or through salary sacrificing, up to a maximum of $50,000 in total. For couples, both individuals will be able to utilise their caps up to a maximum of $100,000.

This scheme relates to voluntary contributions only. First home buyers cannot withdraw any part of their compulsory employer SG super savings.

The proposed start date is 1 July 2022.


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Disclaimer: This article contains general information only. You should consider obtaining independent professional advice in relation to your particular circumstances.

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