It's a new financial year, and that means exciting changes for our superannuation.
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From July 1, 2022, the super guarantee rate will increase, and more Australians will be eligible for super.
The SG rate is the percentage of your base wage or salary that employers contribute to your super. It has climbed to 10.5 per cent effective July 1, up from 10 per cent for the financial year just ended. It's part of a long-term shift that will see employer super contributions reach 12 per cent by 2025.
Also from July 1, 2022, the $450 per month eligibility threshold for employer-paid super is being removed. So workers can now be eligible for super contributions from the boss regardless of how much they earn. An exception to this is employees aged under 18, who need to work more than 30 hours to receive employer super contributions.
All this is great news for the retirement savings of Australians - in particular women, who typically have far less in super when they retire than men. That said, plenty of us could do with having more in super.
Analysis by super industry body ASFA shows the average Australian has $147,425 in super savings. This varies widely depending on where you live. The average balance varies from a high of $205,369 in the ACT to a low of $107,677 in the Northern Territory.
Average super balance by state and territory (Source: ASFA):
ACT $205,369
Victoria $151,679
NSW $149,063
South Australia $147,148
Queensland $142,345
Tasmania $139,719
Western Australia $137,152
Northern Territory $107,677
If you consider that retirement could be a life stage spanning 20, possibly 30 years, it's easy to see that today's average super balance may not stretch far for many people when they leave the workforce.
As we hit the new financial year, it's worth looking at ways to grow your super. If you have several super accounts, think about consolidating your funds into a single account to save on fees. Check the investment option you've selected for your super to be sure it aligns with how you feel about risk. And maybe have a chat to the boss about salary sacrificing part of your regular wage into super.
If you're not sure how your super is shaping up as a source of retirement income, head to the Retirement Planner calculator on the MoneySmart website. It shows your likely income in retirement based on how your super plus any Age Pension payments.
Be aware though, the pension entitlements in MoneySmart's calculator are based on what's available today. Given our ageing population, there is no guarantee that eligibility for the pension won't be finetuned by future government policy. None of us can control this, but we can have a direct say in how we grow our super.
