Liberals slow down SG increase until July 2025

Note: From 1 July 2014, the Superannuation Guarantee rate increased to 9.5% (from the 9.25% that applies for the 2013/2014 year). Due to recent changes in the law, the SG rate will remain at 9.5% for 7 years, increasing to 10% from July 2021, and eventually to 12% from July 2025. See table near end of article.

The previous ALP government legislated a gradual increase in the Superannuation Guarantee rate, starting with a 0.25% increase (from 9% to 9.25%) which took effect from July 2013. The SG rate was then to steadily increase over a 7-year period, to 12% by July 2019.

Before the 2013 federal election, Tony Abbott, announced that if the Coalition won the election, the Superannuation Guarantee increases would be frozen at 9.25% for 2 years, and consequently the full SG increase to 12% would be delayed for 2 years, taking effect from 1 July 2021.

Since winning government, the Liberal government then announced it would be delaying the full SG increase to 12% by another year. Now that’s a negative change to super, and the Liberals promised not to make any unexpected changes to super in the first term. Before you tut tut the PM’s behaviour, or perhaps disagree with my interpretation of events, the story gets even worse.

In the May 2014 Federal Budget, Treasurer Joe Hockey delayed the full increase even further by allowing the SG increase to 9.5% from July 2014, but freezing the SG rate at 9.5% for 3 years. As a result, the full SG increase to 12% was set not take place until the 2022/2023 year, adding another 2 years to the timeframe, and 4 more years than what was set out in the law.

Again, the story gets worse.

Under new laws, the SG will not reach 12% until July 2025 (start of the 2025/2026 year), another 7 years than what set out in the previous laws. See table below for new timeframe for SG increase.

Superannuation Guarantee (SG) is the official term for compulsory super contributions made by employers on behalf of their employees. An employer, regardless of whether they are a small or large business, must contribute the equivalent of 9.5 per cent of an employee’s salary (before July 2014, the percentage was 9.25% for 2013/2014 year, and 9% for 2012/2013 and earlier years).

Background: Originally the Liberals were against the 12% Superannuation Guarantee increase, and then relented and made a public commitment to the historic superannuation increase, once the legislation was passed. Unfortunately, they have had a taste of the ALP’s fiddling at the fringes of super policy. It was only in April 2013 that the Liberal party promised “We will ensure that no more negative unexpected changes occur to the superannuation system so that those planning for their retirement can face the future with a higher degree of predictability.” That’s right, but they didn’t mean the promise applied to this super change.

Superannuation Guarantee entitlements

SG rate increase
 New SG ratesPrevious law
Financial YearRate (%)Rate (%)
2012/2013 (starts 1 July 2012)n/a9.0
2014/2015 (starts 1 July 2014)9.59.5
2021/2022 (starts 1 July 2021)10.012.0

Source: Adapted from explanatory memorandum for Mineral Resource Rent Tax Repeal and Other Measures Act 2014. 


  1. I am confused as to why they have delayed the SG increases. Surely the more people have in Super for retirement, the less future costs to Age pension and Aged Care as people will be better off financially for retirement. Does it have something to do with the short term gain by not increasing it now ?

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