From 1 July 2025, the superannuation guarantee (SG) rate will increase from 11.5% to 12%, marking the final step in a decade-long plan to strengthen the retirement savings of Australian workers. For employers and employees alike, this is a key milestone – one that comes with both financial and operational considerations.
At Advisory One, we’re here to help you navigate what this change means for your business and your team.
What Is the Superannuation Guarantee?
The SG is the minimum percentage of an eligible employee’s ordinary time earnings (OTE) that an employer must contribute to their super fund. Introduced in 1992, the SG has steadily increased over time with the goal of improving the long-term financial security of Australians in retirement.
Since 1 July 2021, the SG rate has been increasing incrementally by 0.5% each year. The rise to 12% on 1 July 2025 is the final scheduled increase under the current legislation.
What Does This Mean for Employers?
If you’re a business owner or payroll manager, now is the time to prepare for the change.
Payroll adjustments:
Your payroll software or systems will need to reflect the new 12% rate from 1 July 2025. If your payroll provider doesn’t update automatically, you’ll need to make manual changes.
Cash flow implications:
If your employees are paid on abase plus superarrangement, this change means additional employer costs. For example, an employee earning $80,000 will see their annual SG contribution rise from $9,200 (11.5%) to $9,600 (12%) — an extra $400 per employee per year.
Salary packaging arrangements:
For employees ontotal remuneration(inclusive of super), the increase may reduce their take-home pay unless renegotiated. It’s important to communicate these changes clearly to affected employees.
Compliance is key:
Missing or underpaying super can lead to penalties, interest, and scrutiny from the ATO. Ensuring timely and accurate payments is essential to avoid compliance risks.
What About Employees?
For employees, the SG increase is good news. While the immediate benefit may seem small, even a 0.5% increase can make a meaningful difference over decades of compounding returns. The rise to 12% supports a more secure retirement, especially for younger workers who will benefit from the full impact over their working lives.
That said, employees on total remuneration packages may notice a slight dip in take-home pay unless their employers opt to absorb the increase.
How Advisory One Can Help
Changes to superannuation are never just numbers — they have practical implications for your people, your budgets, and your systems. Whether you’re a small business or a growing enterprise, Advisory One can assist with:
- Cash flow forecasting for SG increases
- Compliance and reporting advice
Ready for 12%?
With just weeks to go until the change takes effect, now is the time to review your systems and processes. Get in touch with Advisory One today to make sure your business is prepared for the SG increase — and your people are too.
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