Additional Employer Contribution (AEC)

The Additional Employer Contribution (AEC) is a benefit for some employees in Australia that boosts their superannuation (retirement savings). It’s essentially an extra contribution your employer makes on top of the compulsory Superannuation Guarantee (SG) contribution.

Here’s a breakdown of AECs;

What it is:

• An additional payment made by your employer into your superannuation fund, on top of the SG contribution.
• Not mandatory for all employers, but some offer it as part of an employment agreement or award.
• Can be a fixed amount or a percentage of your salary.

Who gets it:

• Eligibility depends on your employer and the superannuation scheme you’re in.
• Common in the NSW Public Sector for employees in the State Authorities Superannuation Scheme (SASS), State Superannuation Scheme (SSS), and the Police Superannuation Scheme (PSS) [3].
• May also be offered in some Enterprise Agreements (EAs) for private sector employees [2, 4].

History of AECs:

• Introduced in 2013 when the SG contribution increased from 9% to 9.25% [1].
• The AEC amount often reflects the increase in the SG rate.

Benefits of AECs:

• Boosts your retirement savings, allowing you to accumulate a larger nest egg.
• Reduces your reliance on the Age Pension in retirement.
• Makes your super more attractive, potentially attracting higher investment returns.

How to find out if you get an AEC:

• Check your employment contract or award.
• Contact your Human Resources department.
• Look for information on your super fund’s website. (e.g., State Super for NSW Public Sector schemes [3]).

Things to consider:

• AECs are not guaranteed and depend on your employer’s policy.
• The amount of the AEC can vary.
• The AEC is paid into your super fund, so its value depends on investment performance.

Tax implications:

• Employer contributions to super, including AECs, are generally tax-deductible for the employer.
• As an employee, you generally don’t pay tax on contributions made to your super until you access your benefits in retirement.

Conclusion:

AECs are a valuable benefit that can significantly improve your retirement savings. If you’re unsure if you receive an AEC, take the initiative to find out. Understanding your super contributions is crucial for planning your financial future.

Additional Notes:

• This explanation is for informational purposes only and doesn’t constitute financial advice.
• Specific details of AECs may vary depending on your employment situation and super fund.
• It’s always best to consult with a financial advisor for personalized advice on your superannuation.