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Superannuation is increasing, and covering more people

Superannuation is increasing, and covering more people

On 1 July 2022, the superannuation guarantee for all workers rose to 10.5 per cent.

The superannuation guarantee, which was introduced by the federal government in 1992, specifies the minimum percentage of your earnings that your employer legally must pay into your nominated super fund.

In 2021, the superannuation guarantee rose to 10 per cent of a worker’s earnings, after having stalled at 9.5 per since 2015. Over the next three years it will continue to rise annually until it reaches 12 per cent in 2025.

Over your working life, this increase could have a significant impact on your super balance upon retirement. For an average member, increasing the superannuation guarantee to 12 per cent could mean retiring with tens of thousands more in savings. For graduates just starting their careers, it will have an even larger impact.

$450 threshold removed and other changes

In addition to the federally legislated increase in the super guarantee, several other changes to super came into effect on 1 July.

  • employees will no longer need to earn at least $450 for the month to receive super contributions
  • the eligibility age for the super downsizer scheme was lowered from 65 to 60
  • the super contribution work test for people aged 67 to 74 will be removed, enabling older Australians to continue building their super savings.

Until 1 July 2022, a worker needed to earn a minimum of $450 per month to be eligible for super payments. This threshold penalised our most vulnerable workers, such as aged care staff in part-time or casual roles, and those working in hospitality.

This also meant it disproportionately affected women, and contributed to the significant retirement gender pay gap that sees women retiring with 47 per cent less in savings than men [Per Capita Report, Not so Super for Women].

ANMF has been lobbying the federal government for several years to remove this threshold. Now that it’s gone, all workers must receive the super guarantee, regardless of their monthly pay from any employer.

The downsizer scheme enables those aged 60 and above to contribute up to $300,000 from the proceeds of the sale of their home into their superannuation fund.

The super contribution work test meant that people aged 67 to 74 could continue making contributions to their super account only if they worked at least 40 hours over a 30-day period in the financial year. As of 1 July 2022, the work test no longer applies (except for those people aged 67 to 74 if they wish to claim a personal super contribution as a tax deduction).