Most Australians have had superannuation since the 1980s when compulsory employer contributions were introduced. But what is compulsory employer contribution, and will it be enough for you in your retirement? How much exactly does your employer need to contribute to your superannuation? Here's what you need to know:
- A minimum of 9% of most employees' wages must be paid to their superannuation - This is required under the Federal Government's Superannuation Guarantee legislation. Exceptions include employees earning less than $450 per month or employees under the age of 18 and not working more than 30 hours per month.
- Additional superannuation contributions can be made in two ways - The first is by salary sacrifice where your employees sacrifice some salary in return for additional super contributions by you as their employer. The second is by salary packaging where your employees pay extra super as part of a salary package, which may also include extra benefits such as a company car.
The Federal Government has proposed Choice of Superannuation Funds legislation, which means employees (rather than the employer) will be able to choose the superannuation fund which best suits their needs. This will also give the employee the choice of investment options, fund managers, levels and insurance cover.
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