COVID-19 might put a spanner in the works for the ongoing super guarantee (SG) increase, which was slated to increase from 9.5% to 10% on 1 July 2021.
The super guarantee is the minimum amount of your earnings that your employer, or you if you are self-employed, has to contribute to your superannuation.
The idea is that this money will help you fund your retirement years, and it will take pressure off the aged pension system.
As Australia’s baby-boomers age, the burden of the age pension and other income support schemes for seniors will continue to increase.
This financial year it has cost the federal budget more than $50 billion. You can understand why the government is still pushing hard to increase the super guarantee to 12% by 2025 (as per the legislated increases).
Things don’t always go to plan…
The Keating government back in 1992 intended that the super guarantee would reach 12% by 2001. Changes of government have resulted in the increase to the super guarantee stalling. The government went to last year’s election with the policy of delivering the increase to 12% by 2025.
The impact of the increase on employers and employees
It is important to understand that this increase will have to come from somebody’s pocket. In most cases, it will be taken from your pay packet, resulting in less “take-home” pay.
Early super withdrawals
The government allowed early withdrawal from super due to the Coronavirus recession. More than $34.8 billion has been withdrawn from super this year*.
We will have to wait and see whether the government continues to pursue its super increase plans, given the current economic environment.
We have conversations frequently with our clients about the importance of having a plan in place, to ensure that you live comfortably in retirement.
We encourage you to contact the office to discuss how we can help you get there.
The information contained in this article is general information only. It is not intended to be a recommendation, offer, advice or invitation to purchase, sell or otherwise deal in securities or other investments. Before making any decision in respect to a financial product, you should seek advice from an appropriately qualified professional.
We believe that the information contained in this document is accurate. However, we are not specifically licensed to provide tax or legal advice and any information that may relate to you should be confirmed with your tax or legal adviser.
Sky Accountants Ballarat
Phone: 1300 328 855
Office Address: 902 Howitt Street, Wendouree, Victoria 3355, Australia
Postal Address: PO Box 2234, Bakery Hill, Victoria 3354
Sky Accountants Sunbury & Gisborne
Phone: 03 97444522
Sunbury Office Address: Suite 13, 33-35 Macedon Street, Sunbury, Victoria 3429, Australia
Gisborne Office Address: 45 Hamilton Street, Gisborne, Victoria 3437, Australia
Postal Address: PO Box 270 Gisborne Victoria 3437