Starting July 1, 2025, a significant superannuation boost will benefit 9.2 million Australians as employer superannuation contributions increase from 11.5% to 12%.
This change could add up to $17,570 to retirement savings over the course of a career, strengthening the financial security of Australians for their future.
This increase is part of the Superannuation Guarantee (SG) and will be implemented over the coming years. Here’s everything you need to know about the super boost, including how much you could potentially gain and how to maximize your benefits.
What is the $17,570 Superannuation Boost?
Starting in July 2025, employer superannuation contributions will rise from 11.5% to 12% of wages. This increase, which applies to all employees receiving employer super contributions, will add up to an estimated $17,570 in retirement savings over a career.
The goal is to ensure that Australians are better prepared for retirement by building more substantial superannuation savings throughout their working years.
The increase in super contributions is part of a long-term plan by the government to address the growing need for individuals to save more for retirement, particularly as life expectancy rises, and government pensions become less reliable as a primary income source.
Why is This Superannuation Increase Happening?
The Superannuation Guarantee (SG) has been increasing gradually since its introduction in 1992. Originally set at just 3%, it has grown to 11.5% in recent years, and the planned increase to 12% by 2025 aims to further improve retirement savings.
This increase is viewed as the minimum required to help Australians retire comfortably without depending heavily on government pensions.
Here are the key reasons for this change:
| Reason for Increase | Explanation |
|---|---|
| Increasing Life Expectancy | More retirees will rely on super savings instead of government pensions. |
| Addressing the Gender Retirement Gap | Women, who generally live longer, will benefit from this increase. |
| Building Stronger Retirement Savings | Aiming to ensure Australians retire with adequate financial support. |
Who Will Benefit from the Superannuation Boost?
The 12% superannuation contribution will benefit anyone who is eligible for employer contributions. This includes all employees, self-employed individuals, and certain other workers who receive super payments.
The increase will have the most significant impact on those who have been part of the workforce for many years and will accumulate substantial superannuation balances as a result of this boost.
Here’s a breakdown of how much extra superannuation you can expect based on different income levels:
| Income Level | Annual Superannuation Contribution (12%) |
|---|---|
| $50,000 per year | $6,000 |
| $75,000 per year | $9,000 |
| $100,000 per year | $12,000 |
How Does This Impact Your Retirement Savings?
A 30-year-old earning $75,000 per year could see an additional $17,570 in super by the time they retire, thanks to this superannuation increase.
Over time, these contributions will accumulate, compounded by interest and investment returns, ultimately providing a significant boost to an individual’s retirement savings.
For example, over a 30-year career, this extra contribution could result in a much larger retirement nest egg, with additional funds for housing, healthcare, and other post-retirement needs.
How to Make the Most of This Superannuation Boost
While the increase in employer contributions is a significant step forward, you can also take steps to further maximize your superannuation savings:
- Consider Voluntary Contributions: If you have additional income, consider making voluntary contributions to your super. This can be done through:
- Salary sacrifice (pre-tax contributions)
- After-tax contributions (non-concessional contributions)
- Take Advantage of Government Incentives: If you earn less than $58,445 per year, the government may offer co-contributions when you make voluntary contributions. For example, contributing $1,000 after-tax could earn you an additional $500 from the government.
- Consolidate Lost Super: Many Australians have lost track of super accounts. Visit MyGov to check for any lost super and combine it into one account for better management.
- Choose a High-Performing Super Fund: Not all super funds perform the same. Look for:
- Low fees
- Consistent returns
- Strong long-term performance
How Employers Should Prepare for the Superannuation Increase
If you are an employer, here’s what you need to do:
- Update Payroll Systems: Make sure your payroll systems reflect the 12% SG increase by July 1, 2025.
- Inform Employees: Educate employees about the super changes and how it benefits their future retirement.
- Ensure Compliance: Make sure your business complies with the Australian Taxation Office (ATO) super regulations to avoid penalties.
The $17,570 superannuation boost set to begin July 2025 is a game-changer for millions of Australians. This increase in the Superannuation Guarantee will help workers build a more secure financial future for their retirement.
By taking advantage of voluntary contributions, government incentives, and choosing the right super fund, Australians can further enhance their superannuation balances and retire with more financial freedom.
FAQs
1. How much extra superannuation will I receive from the increase?
- The super contribution will increase to 12%, adding significant funds to your super balance over your career, potentially $17,570 or more depending on your income level.
2. When will the superannuation increase take effect?
- The increase to 12% will take effect from July 1, 2025.
3. Can I make additional voluntary contributions to my super?
- Yes, you can make salary sacrifice or after-tax contributions to increase your super balance and take advantage of government co-contributions if eligible.