Super contributions to go up to 12% – by 2020
The Government has announced that based on the Henry Review that your employer will be required to put 12% away for your super in 2020. Read the fine print http://www.futuretax.gov.au/pages/FairerSuperannuation.aspx
What This Means for You
1. Your super just became more important
Although it is a long time until you turn 60 and can access your super – it is important to get it right.
There are a series of ads (done by Industry Super?) that shows how a person with the same circumstances but slightly different super results (in the ad it was paying commissions) can result in $100k less when you retire.
If the government has raised the compulsory super to 12% – that means that they think people do not have enough super.
I’ll post an article on Super Strategies for young people but here is the first step – How to combine your super accounts - how to fill out a form or two and have 1 super fund instead of 4.
2. Your Employer might not give you a pay rise
As your employer knows they will have to pay more in super, they might not want to pay you more. If you notice there are 3 years before the 9% starts increasing – this is to allow employers time to update employment contracts, etc.
Background -The Henry Review
Back in May 2008 – the govenment decided to get the tax system reviewed (by Dr Henry).
Why? Because Australian tax is more complex than it needs to be. Every man and his dog needs to use accountants to prepare their tax returns (well dogs probably don’t do tax returns but you get the point).
Check out the other changes resulting from the Henry Review at http://www.futuretax.gov.au/pages/default.aspx