If you’re still working, there’s some good news on the horizon for your retirement nest egg. From 1 July, the superannuation guarantee (SG)—the minimum amount your employer must contribute to your super—is rising from 11.5 per cent to 12 per cent.
It might sound like a small change, but throughout your working life, it could mean tens of thousands of extra dollars in your super account by the time you retire.
This increase is the final step in a series of gradual rises that began over a decade ago, when the Rudd-Gillard government legislated a plan to boost the SG from 9 per cent to 12 per cent.
The aim? To help Australians build a more secure and comfortable retirement, and to take some pressure off the age pension system as our population ages.
Let’s break it down with some real numbers. Thanks to this latest increase, a 30-year-old earning $60,000 a year could see an extra $20,000 in their super by retirement, according to the Association of Superannuation Funds of Australia (ASFA).
For someone on a $100,000 salary, that’s an extra $500 a year going into super—money that will compound and grow over time.
Mary Delahunty, ASFA’s chief executive, said this is a milestone all Australians should be proud of: ‘The system foundations are cemented for young, working people to have a comfortable retirement.’
Of course, the cost of living isn’t standing still. ASFA’s latest figures show that the price of a ‘comfortable’ retirement—including private health insurance, a reliable car, and the ability to enjoy leisure activities—has risen 1.6 per cent in the past year.
For couples, that means needing about $73,900 a year; for singles, $52,300. Even a ‘modest’ retirement, covering just the basics, now requires $48,200 a year for couples and $33,400 for singles. And if you’re renting, those numbers jump even higher.
While these increases are slower than Australia’s current inflation rate, retirees still feel the pinch from rising food, energy, and health costs. Every extra dollar in your super can make a real difference.
The difference between hardship and stability
For many Australians, superannuation is the key to a stable retirement. When compulsory super was introduced in 1992, only one in 10 retirees listed super as a source of income. Now, nine in 10 people aged 30 to 50 have super accounts.
This shift has helped reduce the government’s spending on the age pension, even as our population ages rapidly.
But ASFA pointed out that super can be especially important for renters, who face higher living costs in retirement.
‘Super can be the difference between hardship and stability later in life, especially for renters,’ said Delahunty.
Here’s where it gets a bit tricky. The extra super contribution for some workers will come from your existing pay package, meaning their take-home pay could dip slightly.
This is more likely if you’re on a contract with a ‘total remuneration package’.
If an award or enterprise agreement covers you, the extra super is usually paid on top of your current salary.
Richard Webb, superannuation lead at CPA Australia, recommended checking with your employer to see how the changes will affect you.
‘It’s a good idea to check with your employer to see how they view the changes and what it means for you,’ he said.
Xavier O’Halloran, chief executive of Super Consumers Australia, pointed out that people who’ve spent time out of the workforce—often due to caring responsibilities or being locked out of the housing market—may not see much benefit.
‘Increasing SG further won’t address those inequalities,’ he said.
O’Halloran also highlights that there’s still work to be done to protect retirees, especially regarding the products super funds offer.
Unlike the MySuper accumulation phase, there are no minimum standards or performance tests for retirement products, meaning some retirees could end up with poor-performing options. So, here’s what you can do:
- Check your super contributions: Ensure your employer pays correctly, especially after 1 July.
- Review your super fund: Not all funds are created equal. Compare fees, performance, and insurance options.
- Consider making extra contributions: If you can afford it, even small additional contributions can make a big difference over time.
- Seek advice: If you’re unsure about your super or retirement planning, consider speaking to a financial adviser.
The increase to the super guarantee is a positive step for most working Australians, helping to build bigger nest eggs for retirement.
But it’s not a silver bullet—staying engaged with your super is essential, especially as the cost of living rises.
Have you checked your super lately? Will the increase make a difference to your retirement plans? Are you worried about the rising cost of living, or are you on track for a comfortable retirement? Share your thoughts and experiences in the comments below—we’d love to hear from you.
Also read: Big changes to super, wages and payments start 1 July
