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Superannuation is the only legislated benefit in Australia and an employer is required by law to contribute a percentage of an employee’s salary or wages to an accredited superannuation plan. The superannuation guarantee was introduced in 1992 with a mandatory 3% contribution rate and progressively increasing to 9.5% since then.
Today, Australians have more than $3.1 trillion in superannuation assets, and this is set to rise with the minimum superannuation guarantee contributions increasing from 9.5% to 10% from 1 July 2021. This is the first of the rate increases which will see a gradual 0.5% rate rise each year until it reaches 12% by 2025.
This superannuation increase is a cost to businesses or employees or a combination of the two. An organisation’s remuneration structure will determine how this change is calculated and how it will impact employee’s take-home salaries. Regardless, clear and consistent communications from employers are more important than ever in helping employees understand how the changes will affect them.
Findings from a recent Employee Benefits Study by Metlife showed almost half of Australian employees surveyed suffered poor mental health due to COVID-19, with financial concerns being a key driver of mental ill-health. As such, organisations splitting the cost of the increase with employees or passing on the increase in full to their employees should communicate with empathy.
Employers who are currently contributing above the minimum threshold will also need to decide whether they will continue to pay above the minimum superannuation guarantee and any implications this may have for the attraction and retention of top talent.
Reach out to Honan’s specialised Employee Benefits team for further information and assistance in developing your organisation’s Employee Benefits offering and communications.
