By Shane Krautz - Director

First announced in May 2010, businesses now have just over a year to prepare for the proposed increases to the super guarantee (SG) levy which will commence incrementally from July next year. At this time the SG levy will increase to 9.25% before rising to 12% by July 2019.

Schedule of increases

Increase in super = increase in remuneration

With these increases on the way, it’s probably a good time to start thinking about how the increased SG contributions will affect your bottom line while making sure your payroll systems are recalibrated to take the increases into account.

From a management point of view, it definitely makes sense to discuss the super rises with your employees. It’s important to position these increases to your employees as part of future pay rises.  As Workplace Relations Minister Bill Shorten says, “an increase in super means an increase in remuneration or wages by any other name”.

So by 2014-15, a 4% wage increase will translate into a 3.5% increase plus an additional 0.5% increase in super. Of course this may be a moot point as many workers still focus their pay demands on their take home pay and don’t look at their salary package as a whole. To them super is merely an employer obligation.

It may take a great deal of negotiation to persuade younger workers that their future wage increases will all have a superannuation component built-in..

However, with the gap between Australians' retirement savings and what they actually need to provide them with a comfortable living in their old age growing ever wider, it’s a negotiation area that we’ll all have to tackle.

If you'd like help planning for the increases in the superannuation guarantee levy, please get in touch with myself or the business advisory team at Countplus mbt.