What are superannuation rates?
The rate of Superannuation is the percentage of normal-time earnings that an employer is required to pay into superannuation fund for the employee; the amount charged has gradually increased since its introduction in 1992, and has not yet reached the optimum rate of 12% required by the Australian Government.
When Superannuation Guarantee was introduced in 1992, the rate of standard contribution was 3%, set to increase gradually over a ten year period to 9%. The rate of 9% was maintained until 2012-2013, when Federal Treasurer announced that the rate of contribution would rise over a period of time from 9% to 12%, a 33% increase in contributions. The initial plan was to have increased to 12% by 2020the annual increases began again, but the pace of increase was reviewed following a change in government and slowed down; the rate increases are outlined below:
2012 – 2013 9.00%
2013 – 2014 9.00%
2014 – 2015 9.50%
2015 – 2016 9.50%
2016 – 2017 9.50%
2017 – 2018 9.50%
2018 – 2019 9.50%
2019 – 2020 9.50%
2020 – 2021 9.50%
2021 – 2022 10.00%
2022 – 2023 10.50%
2023 – 2024 11.00%
2024 – 2025 11.50%
2025 – 2026 12.00%
What does an increase in rate mean for me?
If you are due to retire shortly, the increase in superannuation rates will not affect you. However, for those who will affect those who will remain working during and beyond the period of increase, contributions towards their retirement fund will increase by 33%, which will significantly impact their financial standing at the end of their working life.
Payment of Superannuation Guarantee
Payment of superannuation is required on a quarterly basis, 28 days after the end of the previous quarter; payments can be made during this period, as long as they are at the required level by the end of it. All payments must be made into a complying fund, which is one that follows the rules outlined by the Superannuation Industry (Supervision) Act 1993; the fund can be one requested by the employee, or if no preferred fund is stated, the employer can choose a fund for them.
Failure to pay superannuation guarantee will result in a superannuation guarantee charge being levied; this consists of:
- The shortfall in contributions
- An interest charge (10% per annum)
- Administration fee of $20 per employee per quarter.
What happens if my employer has not paid my superannuation?
If you do not believe your superannuation is being paid correctly, the ATO (Australian Tax Office) recommends a three step process:
- Talk to your employer, to find how much they are paying and into which fund.
- Check your last statement from your super fund, or contact them to find out whether contributions were paid during the period under question.
- Lodge an enquiry about unpaid superannuation; the ATO will review contributions made in liaison with your employer, to determine whether contributions have been correctly made.If contributions have not been made and cannot be recovered due to lack of funds, there is unfortunately little fallback or support for those who find themselves with a shortfall due to lack of contribution.
The moral of this section is that while it is good news that contributions are being increased, as an employee you must be vigilant throughout your working life to ensure that these contributions are being made as expected.