It is important to note that the current Superannuation Guarantee rate is 10.5% (11% from 1/7/2023) of an employee’s OTE. However, this rate will gradually increase to 12% by 2025.
One of the main benefits of the Superannuation Guarantee is that it allows individuals to save for their retirement, which can be a substantial amount of money over a working career. Furthermore, superannuation funds invest in various asset classes, including shares, property, and fixed income. This enables individuals to earn a higher rate of return on their investment, which results in a larger superannuation balance upon retirement.
It is also important to note that while the Superannuation Guarantee is a mandatory payment, by the employer, it is not the only way to save for retirement. Individuals can also make additional contributions to their superannuation fund through salary sacrificing or personal contributions. These contributions are generally not taxed if below the concessional rate, currently $27,500, meaning that individuals can save more while building their retirement savings.
In conclusion, the Superannuation Guarantee is a mandatory payment made by employers into eligible employees’ superannuation funds. Employers calculate this payment based on the employee’s Ordinary Time Earnings (OTE) and make the payment before deducting tax. The Superannuation Guarantee allows individuals to save for retirement, earn higher investment returns, and benefit from concessional tax rates.
If you want to learn more about the Superannuation Guarantee and how it can benefit your retirement savings, it’s a good idea to talk to a financial advisor. They can provide you with expert advice on how to maximise your superannuation contributions and take advantage of tax benefits. Don’t hesitate to reach out to Katia Chehade who can put you in contact with trusted financial advisors today to start planning for a financially secure retirement.