Superannuation Guarantee Changes – What You Need to Know?

The superannuation guarantee is legislated to increase from 9.5 percent to 12 percent in 0.5 percentage point increments from 2021 through to 2025. The first increase, from 9.5 to 10 percent, is set to take effect on  1 July 2021.

What does this mean for me and my business?

With the increase in the superannuation guarantee, employers are now posed with the challenge of deciding whether or not they offset at least some of the cost of higher superannuation contributions by reducing employees’ take-home pay. This is a commercial decision that each business will need to make.  If you currently pay your employees a total remuneration package, then this approach will offset this additional supercharge by reducing the take-home pay of employees from 1 July 2021. However, if employees are employed on a ‘plus superannuation’ basis, then in the absence of a remuneration review, there will be an additional cost to the business. In addition, employers will need to incorporate the increase in SG payable in budgeting for upcoming employee benefits, where an employee’s superannuation is paid on top of their cash income.

The following example shows the changes to an employee’s remuneration, dependant on if they are remunerated on a ‘package’ or ‘plus superannuation’ basis.

$80,000.00 ‘package’

Salary above is inclusive of base salary and superannuation guarantee (SG)


$80,000.00 ‘plus superannuation’

Salary above is exclusive of superannuation guarantee (SG)


20/21 SG rate of 9.5% 21/22 SG rate of 10% 20/21 SG rate of 9.5% 21/22 SG rate of 10%
Base Salary $73,059.36 $72,727.27 $80,000.00 $80,000.00
Superannuation $  6,940.64 $  7,272.73 $  7,600.00 $  8,000.00
Total package $80,000.00 $80,000.00 $87,600.00 $88,000.00
Changes For employers who pay employees on a ‘package’ basis, there is no change to total remuneration amount.



For employers who pay employees on a ‘plus superannuation’ basis, there is a requirement to adjust overall remuneration to account for the 0.5% increase in superannuation.


What does this mean for me as an employee? 

Depending on the basis of your employment, you will either have no change to your take-home pay and your employer will pay the additional 0.5% into your superannuation.  Or if you are paid on total remuneration package inclusive of superannuation, your net take-home pay may differ from 1 July as the 0.5% increase in superannuation will continue to be paid, but your employer will not increase your total remuneration.

For employees seeking to maximise concessional contributions to superannuation, from 1 July 2021 the concessional contribution cap will increase to $27,500.

For more information, please reach out to your Morrows Advisor on 9690 5700.

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