Latest news with #SuperannuationGuarantee
Perth Now
14 hours ago
- Business
- Perth Now
Simple change making Aussies $125k better off
The average young Australian is tipped to be $125,000 better off in their retirement simply by staying in the workforce, a major superannuation fund reveals. Australian Retirement Trust says the rise in the superannuation guarantee over the last five years is 'good news' for Australian workers who will have more in their retirement nest egg. Under changes to the superannuation guarantee proposed by the Rudd government and enacted by the Morrison government, every working Aussies superannuation rate automatically went from 9.5 to 12.00 per cent. The changes were brought in incrementally, up 0.5 per cent a year, with the final change starting from July 1 2025. Australians tipped to be $125k better off when they retire. NewsWire / Nicholas Eagar Credit: NewsWire According to the Australian Retirement Trust this five year plan will now see a 30-year old earning $100,000 retire with an additional $125,000 when they finish up their careers. Australian retirement trust executive general manager for advocacy and impact, Anne Fuchs, said the boost to the SG rate is good news for all working Australians. 'This half per cent step may seem small, but for working Australians, it's like reaching the summit of your own financial Everest,' Mrs Fuchs said. 'Since the Superannuation Guarantee was introduced in 1992, it has become the cornerstone of Australia's retirement system – evolving from a modest 3 per cent contribution to a robust framework that provides you with meaningful savings for your future.' Separate research from the Association of Superannuation Funds said the increase from to 12 per cent will mean the median 30-year old worker making $75,000 a year will add about $20,000 to their superannuation balance by the time they retire. The ASFA predicts the average 30-year old worker will now achieve a comfortable retirement. NewsWire / John Appleyard Credit: News Corp Australia This $20,000 increase will mean the median 30-year old will retire with $610,000 in superannuation, above the $53,383 a year or $595,000 they would need for a comfortable retirement. Couples should fare even better. ASFA says a couple requires $73,875 a year or $690,000 combined in total to live comfortably in retirement using their super plus age pension top-ups. The major caveat to these figures for singles and couples is owning your own home by retirement. Check your superannuation rate While the rate of change might seem small, Australian Retirement Trust urges Aussies to check their superannuation rate. According to survey data by the super fund four out of every five Australians don't know how much they've put away for retirement, while only one in five can correctly identify the current superannuation guarantee. 'Whether you're just starting your career or nearing retirement, understanding these changes can help you make smarter financial decisions,' Ms Fuchs said. 'As we look towards our own retirement savings, we should also look towards ensuring the Superannuation Guarantee is fit-for-purpose as our nation ages and grows.
7NEWS
2 days ago
- Business
- 7NEWS
Superannuation Guarantee increase to 12 per cent set to give Australians thousands more in retirement boost
Close to 10 million Australians are weeks away from a superannuation boost that experts believe will place young workers on track for a 'comfortable retirement'. The Superannuation Guarantee — the minimum amount your employer is legally required to pay towards your super every year — will increase from July 1. The guarantee is currently at 11.5 per cent of your annual earnings, but will jump to 12 per cent in the new financial year. A 30-year-old worker earning $75,000 a year is set to be $20,000 better off when they retire, the Association of Superannuation Funds of Australia (ASFA) calculates. It means that the worker will retire with $610,000 in super savings, $15,000 above what a single homeowner needs for a comfortable retirement that includes a budget for top level health insurance, a reasonable car that is maintained, regular leisure activities and holidays, and the confidence to use air conditioning and other utilities. It is the 'first time' ASFA has projected that a 30-year-old on a median wage will be on track to achieve that standard of living when they leave the workforce. 'This is a major milestone in Australia's retirement system,' association chief executive Mary Delahunty said. 'With the super guarantee increase to 12 per cent, we are seeing super fulfil its objective of providing a dignified retirement for ordinary Australians.' Check your pay slip CPA Australia's superannuation lead Richard Webb said the increase 'could ultimately be worth thousands' by retirement, but workers should have a word with their employer before the new financial year. 'If your employment contract includes a total remuneration package including super, this could mean less take-home pay at the end of the month,' Webb said. 'However, for those on award or enterprise agreements, your pay agreement is more likely to be a salary, which means the change will not affect your take-home pay. 'It's a good idea to check with your employer to see how they view the changes and what it means for you. 'Otherwise, you might get a shock if your take-home pay is a little less than expected.' Costs in retirement ASFA's latest Retirement Standard benchmark found the cost of funding a comfortable retirement had increased 1.6 per cent in the last year, with most homeowning couples needing $73,875 annually and most singles who own a dwelling needing $52,383. Single renters aged 65 need about $46,663 annually for a modest retirement, while couples leasing their home need about $64,259. The super lump sum needed for a modest standard of living (basic health insurance, a cheaper car, infrequent leisure activities, bill watching and utility sacrifices, and limited meals at restaurants) is $340,000 for a single person renting privately and $385,000 for a couple. 'These new figures demonstrate how important it is that we build more homes in this country so Australians can buy a house or an apartment,' Delahunty said. 'They also illustrate how super can be the difference between hardship and stability later in life, especially for renters, which is why we need to keep it safe for retirement.' The association said that overall inflation pressures had eased, budgets were being stretched by increases in fruit and vegetables (6.6 per cent), meat and seafood (4.3 per cent) and electricity prices. 'Australians in retirement are starting to benefit from a slowdown in inflation, but the prices of essentials are still rising,' Delahunty said. 'It's a timely reminder that achieving a dignified retirement takes planning, and superannuation plays a critical role in making that possible.' The Super Members Council said the guarantee boost will help cover bills, trips away and financial security. 'More super means more freedom, more choices and more opportunities to do the things you love,' council chief executive Misha Schubert said. Super health check Australia's super guarantee was introduced in 1992. At the time, the mandatory contribution rate was just 3 per cent. With July marking the final legislated increase to the SG since 2021, Webb said it is important for Australians to ensure they are in control of the super (you can find more super tips here). 'It's never too late to look into growing your retirement savings, including making additional contributions to your fund before the end of the financial year,' Webb said. And, with the , it could also be time to take a look at what you might be missing out on.
Time of India
13-06-2025
- Business
- Time of India
Superannuation changes explained: Why 80,000 retired and super-rich Aussies will pay more tax
Live Events Key changes from July 1 Why were the changes introduced? Who is affected from this rich tax and how? Support and backlash (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel The federal government will introduce new tax measures targeted at high-value accounts or the richest retirement savers and increase the mandatory employer contribution rate. There are growing worries that the country's $4.1 trillion pension system is becoming a way for people to accumulate will change Australia's superannuation system starting on July 1. The Labour Government called for making the system more equitable and Labor Party initially unveiled this proposal in 2023, saying that it wouldn't take effect until after the 2025 election. However, it was put on hold due to not getting the required support in the Senate This change came after the Labor Party's landslide victory last month, which has now paved the way for the bill to be prioritized in parliament in mandatory employer contribution of the Superannuation Guarantee (SG) has increased from 11.5% to 12% of ordinary wages.A 30% tax will now apply to earnings on the portion of super balances above $3 million. This is in addition to the standard 15% tax that they, along with most Australian workers, usually pay on investment earnings in their superannuation the excess over $3 million is taxed at the higher 10,000 Australians with defined benefit pensions, mostly retired public servants, will also face the 30% tax. However, they can defer payment until benefits are accessed, with interest Labor government has said the changes are a step toward fairness and budget sustainability. Treasurer Jim Chalmers said it's 'hard to justify generous tax breaks on very large balances' when most Australians retire with much less. The government expects to raise approximately $2.7 billion annually, or $40 billion over a decade, helping to fund aged care and health Australians will benefit from the rise in employer contributions. A person earning $100,000 annually will see their super contributions grow from $11,500 to $12,000 annually. Over time, this translates to significant extra employees on fixed 'salary plus super' contracts may see a slight reduction in take-home pay if their employer offsets the increased SG who salary-sacrifice into super should also watch the new concessional cap, now set at $30,000, to avoid paying extra 80,000 Australians with super balances exceeding $3 million will face the new 30% tax on earnings above that threshold. This change targets the ultra-wealthy, many of whom benefit significantly from the low-tax super the tax also applies to unrealized capital gains. That means you may owe tax on the rising value of your investments even if you haven't sold them. Critics say this could hurt those with illiquid assets like property or private new rules also cover defined benefit pensions, which pay fixed retirement income rather than fluctuating investment returns. Those affected can defer the tax until they begin receiving payments, but interest will apply, currently around 4.5% per reforms are unlikely to have a direct impact on younger workers right now. Most will take decades to accumulate even a fraction of $3 million in there's a long-term concern: the $3 million threshold is not indexed to inflation. Over time, more people, including younger Australians, could fall under the higher tax rate due to account growth. Some financial experts warn that if thresholds remain frozen, this could become a 'tax trap' decades of the reform argue it helps restore equity to a system increasingly skewed in favour of the rich. Prime Minister Anthony Albanese has called the changes "modest but meaningful," while Treasurer Chalmers says the goal is 'fiscal responsibility with fairness.'Critics, however, point to the lack of inflation adjustment and the taxing of unrealized gains as potential long-term problems. Opposition leaders have warned that younger workers may eventually be caught in a 'tax time bomb.'
