Superannuation (Super) provides many Australian retirees with financial stability in later life. Government legislation stipulates that for the majority of working Australians a percentage of their wages gets paid into the fund of their choosing (or the nominated fund of their employer) for life. Super is the biggest investment many Australians will make. From 1 July 2024, the Superannuation Guarantee will increase. This is an effort to bolster balances and ensure retirees are not overly reliant on the age pension.
What has changed?
Up until June 30th of this year, under the Superannuation Guarantee, employers are required to pay all eligible workers an 11% superannuation payment in addition to their take-home pay.
As of July 1st 2024, all eligible workers must now receive a 11.5% super payment, in an effort to increase the funds that employees will have saved for retirement via their superannuation account.
How can I check how these changes are affecting me?
- The first step is to simply check your first payslip once these changes role over.
- If your take-home pay has remained the same and you can see that a 11.5% super contribution is now being paid into your nominated superannuation account – good news – you have an employer that has adjusted for this increase without deducting your base wage. You have effectively received an increase in total remuneration because your base salary has remained the same, while your superannuation payments have increased.
- If you notice that your take-home pay is less, then you are probably on a fixed-remuneration employment agreement and the 0.5% superannuation increase has been taken out of your base salary. In other words, your employer has decreased your take home pay in order to increase your superannuation payments.
Our recommendation if your take home salary has been reduced
Have a look at your employment contract and check whether it specifies a total remuneration package or a base salary plus super. If your contract stipulates you are to receive a base salary plus superannuation, then it’s possible there has been a mistake and you can discuss this with your employer.
However, if your contract stipulates a total remuneration agreement, then your employer is within their rights to have reduced your base salary to account for the legislated 0.5% superannuation increase.
Steps you can take:
- Ask your employer if they would consider increasing your base salary so that your take-home-pay can return to the amount it was prior to the superannuation increase.
- Ask your employer if they would consider re-writing your contract so that your agreement becomes base salary plus superannuation. In this instance, any future superannuation increases should not affect your take-home-pay.
It might be uncomfortable raising queries like this with your employer. However, they are ultimately responsible for communicating what the new Superannuation Guarantee change means for their employees. If they are reluctant or defensive about this, it’s important to remember that there are plenty of other employers out there who will happily have this kind of conversation.