Does the mention of superannuation cause your eyes to glaze over? We agree it may not be the most scintillating of topics, but it's an important one nonetheless. Employers need to be across their super obligations and aware of imminent changes which are part of a wider reform process designed to strengthen Australia’s superannuation system.
There are rules effective from 1 January 2014 about default super funds. Unless employees have nominated a specific super fund, employers must pay super contributions into an approved MySuper fund. There is a defined list of approved MySuper funds. Employers will need to check if their current default super fund is providing a MySuper product and if it is still meeting their employees’ needs.
Increases to guarantee
the super guarantee amount increased from 9 % to 9.25% in July 2013. Assuming there are no political changes in the interim, the guarantee will continue to increase in incremental steps until it reaches 12%. The next increase, to 9.5%, is due on 1 July 2014. Employers should ensure they have a reminder well in advance of expected increases.
A connected consideration is a review of your employment contracts. Employers should review the terms covering salary packages and superannuation in light of the increasing guarantee contribution. Some employee salary packages are inclusive of super and some are structured with a base salary plus super. The former will involve a re-calculation of take-home pay to account for the small increase to the superannuation guarantee. The aggregate amount will remain constant but the proportions will alter slightly. In the case of base salary plus super, the only change will be to the superannuation contribution.
Other recent and forthcoming changes include the removal of the upper age limit for the super guarantee, and new administrative processes for employers paying superannuation. There is no longer an upper age limit for the super guarantee, effective 1 July 2013. Employers who have eligible employees over 70 will need to pay super guarantee contributions for these employees. Over the next two years there will be changes to the administrative processing and organisation of super, which includes how super is paid to funds and how new employees are added. This will be a phased in process from 2014 with the compliance dates determined by the size of your business.
Please contact us if you require assistance or advice tailored to your business.
Sarah Waterhouse, Solicitor, BlandsLaw
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