Note: Due to recent changes in the law, the SG rate will remain at 9.5% until June 2021, increasing to 10% from July 2021, and eventually increasing to 12% from July 2025. See comprehensive table near end of article.
Under new laws passed by the Liberal government, the SG will now not reach 12% until July 2025 (start of the 2025/2026 year), another 7 years from what was set out in the previous laws.
The previous ALP government legislated a gradual increase in the Superannuation Guarantee rate over a 7-year period, starting with a 0.25% increase (from 9% to 9.25%) which took effect from July 2013, and then a further 0.25% increase (from 9.25% to 9.5%), which took effect from July 2014. The SG rate was then to steadily increase, to 12% by July 2019, with the SG rate to hit 10% by July 2015.
Under the Liberal government, the SG rate increase has been dramatically slowed, with the SG rate increase to 10% delayed by 7 years, taking effect from July 2021.
See table below for new timeframe (and original 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% 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).
How did the Liberal government stall the SG rate increase?
Before the 2013 federal election, the then opposition leader, 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 rate 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 (1 July 2022). The story gets worse. In the May 2014 Federal Budget, the then Treasurer Joe Hockey delayed the full increase even further by allowing the SG increase to 9.5% from July 2014 (as previously legislated), but freezing the SG rate at 9.5% for 3 years. As a result, the full SG increase to 12% was set not to 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 negotiated through a hostile senate, the SG will now not reach 12% until July 2025 (start of the 2025/2026 year), another 7 years than what set out in the previous laws (legislated by the ALP government. See table below for new timeframe for SG increase.
Superannuation Guarantee entitlements: SG rate increase
SG Rate (%)
|SG Rate (%)
under previous law
|2012/2013 (starts 1 July 2012)||9.0||9.0|
|2014/2015 (starts 1 July 2014)||9.5||9.5|
|2021/2022 (starts 1 July 2021)||10.0||12.0|
Source: Adapted from explanatory memorandum for Mineral Resource Rent Tax Repeal and Other Measures Act 2014.
For more information…
For more information, see the following SuperGuide articles: