Important super updates
What you need to know about recent changes to super legislation and the details you should be aware of as an employer.
With the start of a new financial year, the key updates in super for employers from the start of the 2023/24 financial year are:
The Super Guarantee (SG) rate has increased to 11% of ordinary time earnings. This started from 1 July 2023 and is part of a staged increase in the SG to 11.5% earnings in 2024/25 and finally 12% in 2025/26. Employers should note that:
The transfer balance cap has increased to $1.9m from 1 July 2023 (up from $1.7m in 2022/23). The Transfer Balance Cap is the maximum amount of super savings that can be transferred to super pensions in the tax-exempt retirement phase. Employers should note that:
The new $1.9m threshold also impacts whether members can make non-concessional contributions during the financial year. If the total super balance (total amount held in super and pensions) on 30/6/2023 is more than $1.9m, any new non-concessional contributions (eg personal contributions or spouse contributions) will treated as an excess non-concessional contribution. Employers should note:
Minimum annual payments for account-based superannuation pensions have returned to standard rates starting 1 July 2023, following several years of reduced rates during COVID. This means the minimum pension payments are:
What is to come: Payday super
As part of the 2023 Federal Budget, the Government announced that from 1 July 2026 employers will be required to pay super guarantee (SG) contributions at the same time as wages and salary. Payday super is a key Government reform to super and is expected to increase the frequency of contributions into super, and significantly reduce employer non-compliance with SG contributions. Under the current law, which goes back to 1992, SG contributions are only required on a quarterly basis. However since 2017 there have been a number of calls to align super contributions with payroll1.
Some employers have voluntarily moved to align the payment of SG contributions with salary and wages, following the introduction of Single Touch Payroll (STP). STP now includes additional information such as salary sacrifice superannuation contributions and is compulsory for all employers, although small employers can still report quarterly for directors and family members.
The ATO is currently talking to employers and the super industry about the issues involved with the introduction of Payday super, including:
- The amount and quality of data that will be processed by super funds;
- The problems employers will have, such as cash flow and workloads, calculating contributions, and onboarding new employees.
- The role of clearing houses and payroll providers.
The Budget announcement of payday super has brought into focus some of the myriad of rules that apply to employers when it comes to making super contributions - crossing industrial, super and tax law. Under these rules, employers must make:
SG contributions of at least 11% of ordinary time earnings, measured monthly, and paid by 28th day after the end of the quarter. Choice of fund rules and super stapling apply to SG contributions.
Salary sacrifice contributions. Employers are generally not required to offer salary sacrifice arrangements to employees, but if offered the rules are:
All employer contributions must be made through SuperStream.
Whilst there are no immediate changes required under the payday super proposal, employers may wish to remind staff to review their contribution arrangements given the increase in SG rates, and consider potential issues should payday super be legislated.
_____________________________1 The Senate Economics committee recommended a change from quarterly SG contributions from quarterly to payday or at least monthly.