As of 1 July 2025, the Superannuation Guarantee (SG) rate in Australia has increased from 11.5% to 12%. This marks the final step in a series of legislated increases aimed at enhancing retirement savings for Australian workers.
What is the Superannuation Guarantee?
The Superannuation Guarantee is the minimum percentage of an employee’s ordinary time earnings (OTE) that employers are legally required to contribute to their employees’ superannuation funds. This system is designed to ensure that workers accumulate sufficient savings for retirement.
Key Changes Effective from July 1, 2025
- SG Rate Increase: The SG rate has risen from 11.5% to 12%
- Effective Date: The new rate applies to all salary and wages paid to eligible workers on or after July 1 2025, regardless of when the work was performed.
- Quarterly Due Date: Employers must pay SG contributions at least quarterly, with the next due date being 28 July 2025.
Impact on Employees
For most employees, this increase means more money being contributed to their superannuation accounts, enhancing their retirement savings over time. For example, an individual earning $100,000 annually will see their employer’s contributions rise from $11,500 to $12,000 per year.
However, employees on total remuneration packages that include superannuation may experience a slight reduction in take-home pay, as the increased SG contribution could be offset against their gross salary. It’s advisable for such employees to review their employment contracts and discuss any concerns with their employers.
Considerations for Employers
Employers should:
- Update Payroll Systems: Ensure that payroll systems are adjusted to reflect the new 12% SG rate for payments made on or after July 1 2025.
- Review Employment Contracts: Examining employment agreements to determine how the SG increase affects total remuneration packages.
- Ensure Timely Payments: Make SG contributions by the quarterly due dates to avoid the Superannuation Guarantee Charge (SGC), which includes interest and administrative penalties.
Long-Term Benefits
The incremental increase to a 12% SG rate is projected to significantly boost retirement savings for Australian workers. For instance, a 30-year-old earning an average income could see an increase of approximately $98,000 in their superannuation balance by retirement age due to this change.
Final Thoughts
The rise in the Superannuation Guarantee rate to 12% is a pivotal development in Australia’s retirement savings landscape. Employees should review their payslips and employment contracts to understand the impact on their finances, while employers must ensure compliance with the new requirements. Staying informed and proactive will help both parties navigate this change effectively.