Employers should be prepared for the increases to the Superannuation Guarantee (SG) rate.
The steady climb in the SG rate requires employers to contribute more money into their employees’ superannuation fund.
The SG rate has already increased to 9.25 per cent as of July 2013. The next increase to 9.5 per cent will come into play in July 2014.
It is scheduled to increase further over the coming years, eventually reaching the 12 per cent target.
It is also important that employers are aware that the upper age limit for paying the SG for an employee was removed this year.
This is to allow mature age workers to build up their retirement savings for a longer period of time.
The removal of the upper age limit means that employers must continue to pay eligible employees super if they are over 70 and continue to be employed by the business. Employers need to ensure that they are prepared for the changes to the SG rate rise.
It is essential that employers do not make rough calculations about their financial obligations, or they may find themselves caught out.
Now is the time for you to make the effort to put systems in place. A few systems can alert you each time an increase in super is due. This can help to ensure that a you do not miss an increase date.
Automatic superannuation systems are able to take the administrative issues out of meeting superannuation obligations.
Systems can also help to calculate what the costs will be as the SG continues to increase over the years.
Employers will also need to check that their payroll and accounting systems are able to cater for the gradual increase in the SG rate, as well as the removal of the upper age limit.
Also, employers need to consider the contents of the payslips they are issuing to employees.
Payslips will now need to identify the date when superannuation will be paid to employees.
You should also take this opportunity to review their employment arrangements and make sure that superannuation is being dealt with appropriately in light of these changes.
If you wish to discuss the Super rate rise in more details, please do not hesitate to contact our professional and friendly staff.