Employer Super Guarantee (SG)

Employer Super Guarantee (SG) what is it?

The SG is a percentage of your salary that your employer must contribute to your superannuation fund each year. This helps you accumulate a nest egg you can access when you retire. Currently, the SG rate is 11%, but it’s gradually increasing to reach 12% by July 1st, 2025.

How Does it Work?

• Eligibility: You’re generally eligible for SG contributions if you’re:
  • Over 18 years old, or
  • Under 18 and working more than 30 hours a week.
• Calculation: Your employer calculates the SG contribution based on your ordinary time earnings (OTE). This includes your base salary, overtime payments (up to certain limits), allowances (excluding travel), and bonuses.
• Contribution Frequency: Employers must pay the SG contributions at least quarterly, within 28 days after the end of each quarter. However, they can choose to pay more frequently.
• Fund Choice: In some cases, you might be able to choose which super fund your employer pays the SG contributions into. Otherwise, your employer will select a default fund for you.

Benefits of SG for You:

• Free Money: It’s essentially free money towards your retirement. You don’t have to contribute directly from your salary (although you can choose to make additional contributions).
• Compounding Interest: The earlier you start saving for retirement, the more time your money has to grow through compound interest. SG contributions start building your retirement savings early in your career.
• Tax Benefits: Employer SG contributions are typically tax-deductible for your employer, making it an attractive way for them to contribute to your financial security.

Things to Keep in Mind:

• Maximum Contribution Base: There’s a limit on how much of your salary your employer needs to pay SG on. This limit is adjusted annually and is currently indexed to the Average Weekly Ordinary Time Earnings (AWOTE).
• Super Guarantee Charge: If your employer doesn’t pay the SG on time or into the correct fund, they may incur a penalty called the Super Guarantee Charge (SGC). This is an additional cost for them and doesn’t benefit you.
• Monitoring Your SG: It’s important to keep track of your SG contributions. You can usually access this information through your super fund’s online portal or by contacting them directly.

The Takeaway

The SG is a valuable benefit that helps you build a secure financial future. By understanding how it works, you can ensure you’re receiving the contributions you’re entitled to and make informed decisions about your superannuation.

Further Resources:

For more information about the SG, you can visit the websites of the Australian Taxation Office (ATO) (https://www.ato.gov.au/businesses-and-organisations/super-for-employers) and Fair Work Ombudsman (https://www.fairwork.gov.au/).