Employer superannuation payments now 10%

Posted 22/7/2021 by Alasdair Spinner

 

Excellent news! It has been a while coming but the new financial year in Australia saw the ushering in of a new superannuation - 'super' - rate employers are legally required to pay their employees. Super is your pension - funded by your employer (although you can also top it up).

 

For the uninitiated, superannuation is an employee benefit which your employer must pay by law.  Employers must now pay the equivalent of a minimum of 10% of your basic salary and qualifying allowances into a fund of your choice up to a cap of $27,500 per annum. It used to be 9.5%. This payment is not taxed going in to a superannuation fund of your choice and it isn't taxed when you withdraw it. However, you can't access your super until you're 60 (in some rare case you can, related to hardship, terminal illness etc.) The tax free element really is fantastic. 

 

Employers will let you top this up from the capped % amount from your salary (tax free) through their salary sacrifice scheme. 

Your first employer in Australia will be a large healthcare body with many employees. This means it has power (via its employees' superannuation funds) to negotiate additional perks with its chosen default superannuation fund. By perks, I mean things like free life insurance or low management fees. 

 

You have full control over the fund. You can change the super fund if you're not happy with your employer's default. Research a new one to match your financial goals or let your financial advisor do the leg work. Most funds enable you to choose where you want your super invested - e.g. as cash assets, or clean energy companies, biotech, low risk, high risk etc. For example, each year when I get my statement I might make minor adjustments to my super fund's investment distribution using the fund's online dashboard. 

 

It's a great benefit and great news its gone up to 10%.

I'm a recruiter with an Australian superannuation fund. I'm not a financial advisor. Make sure you seek professional advice.

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