The Association of Superannuation Funds of Australia (ASFA) has calculated that the cost to an employer of the Superannuation Guarantee increase on 1 July is just $5.75 a week for an employee on the median annual wage of $60,000 and $6.50 for an employee on average earnings of $68,000 a week.
This low cost makes it more than possible for most businesses to maintain real wages while paying the increased rate, according to ASFA.
Sharing the profits
Citing the fact that over the last two decades employees, on average, have not been fully compensated for increases in economic productivity, ASFA says most Australian businesses should be able to absorb the increase in the SG rate in broad terms.
“The average Australian worker has not shared in ballooning business profits over the last twenty years,” ASFA chief executive officer Martin Fahy said in a release.
“The long-overdue increase in the Super Guarantee will go some way to address the structural imbalances that continue to occur between fat profits and flat wages.”
While it should not represent a large cost to business, the SG increase will make a big difference to the retirement savings of many Australians over time, particularly if the SG is increased to 12 per cent in 2025 as planned.
A $19,000 boost
ASFA estimates that for the average worker, the half a percentage point increase on 1 July represents a $19,000 boost to their superannuation at retirement. If the SG were allowed to increase to 12 per cent on 1 July 2025, the increase would represent an additional $85,000 at retirement for the average worker.
The increase to 12 per cent would also mean that double the number of Australian workers would reach the ASFA Comfortable Retirement standard – a benchmark compiled by ASFA of the average living costs of a retiree.
ASFA calls on all employers to “do the right thing for their workers”.