There are three changes to superannuation taking effect from tomorrow, 1 July.
Let's take a look.
Image source: Getty Images
Your superannuation is about to get a boost
Super Guarantee lifts to 12%
The most significant change is that the Superannuation Guarantee (SG) is increasing from 11.5% to 12% from tomorrow.
The Guarantee is the compulsory minimum amount of superannuation that employers must pay into their employees' super accounts.
This is the last of a long run of legislated increases to the Super Guarantee.
The Association of Superannuation Funds of Australia (ASFA) says the lift to 12% is a major milestone in Australia's retirement system.
It means a 30-year-old worker earning the median wage of $75,000 per annum for life will have enough super for a comfortable retirement.
ASFA CEO Mary Delahunty said:
With the 12% super guarantee coming in, we can now say that the system foundations are cemented for young, working people to have a comfortable retirement. It's a moment all Australians should be proud of.
Super will apply to paid parental leave
Also, from tomorrow, superannuation will apply to the paid parental leave (PPL) benefit.
The Australian Taxation Office (ATO) will pay the PPL superannuation as a lump sum after the end of each financial year.
Hence, if you take PPL at any time in FY25, you won't receive the superannuation component until July 2026 at the earliest.
Superannuation transfer balance cap increased
The general transfer balance cap (TBC), which limits the amount of super that can be transferred into a tax-free retirement phase account, will increase from $1.9 million to $2 million tomorrow.
This adjustment will allow people to transfer more funds into tax-free retirement accounts.
People who already have a pension account and did not previously reach or exceed their TBC will be eligible for a proportional increase.
How much superannuation do you need for retirement?
The amount of superannuation needed by age 67 to fund a comfortable retirement is $690,000 for couples and $595,000 for singles.
For a modest retirement, couples and singles require $100,000 in super.
These figures assume debt-free home ownership, a part-pension, and 6% total annual returns on superannuation savings.
Retirees who rent their homes require higher superannuation savings to fund a modest retirement.
Couples need at least $385,000 in superannuation, and singles need at least $340,000, if they are renting.
For homeowners, a 'comfortable' retirement costs $73,875 per annum for couples and $52,383 for singles.
A 'modest' retirement costs $48,184 for couples and $33,386 for singles.
For renters, a modest retirement costs $64,259 per annum for couples and $46,663 per annum for singles.
The full pension, including all supplements, is $45,037.20 per year for couples and $29,874 for singles.
