Confused about Superannuation Guarantee (SG)? If you're unfamiliar with this term, don't worry, we're here to break down everything you need to know about SG, from its definition, who is eligible for it and how it might impact you.
So… what exactly is a Superannuation Guarantee? In simple terms, it is a compulsory contribution fund that employers make on behalf of their employees. Superannuation funds invest this money on your behalf into a diversified range of assets, such as shares, private equity, infrastructure, bonds, and private equity. The intention behind this fund is to build a financial safety net for employees to access once they reach retirement age. Depending on your year of birth, the minimum retirement age in Australia currently stands around 65-67 years old.
Whether you receive or have to pay SG into your own fund depends on your status as an ‘employee’ for SG purposes. If you are classified as an employee, your employer must make compulsory contributions into your account. The current rate of contributions stands at 10.5%, however this rate is set to gradually change over the coming years. These incremental changes reflect the Australian Government’s efforts to ensure a more secure retirement for employees.
Upcoming SG increases:
1 July 2023 11%
1 July 2024 11.5%
1 July 2025 12.0%
So, what if you’re self-employed? If you operate as a sole trader or are part of a partnership, you are not required to pay SG contributions for yourself. However, if you work under a company structure, and you are a working Director, you may be obligated to make SG contributions.
If you’re uncertain about your eligibility for Superannuation Guarantee or need further information, the ATO’s Super Guarantee eligibility tool is a great place to begin.
Alternatively, reach out to us today for tailored support and advice regarding all things super - it’s never too early to get savvy about retirement!
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