Key superannuation news and updates

With superannuation funds now managing over $3.9 trillion and ongoing legislative updates reshaping the landscape, staying informed is more urgent than ever. These developments impact how you manage employee benefits and have significant implications for financial planning, budgeting, and the overall efficiency of your business operations.

In this article, we explore the latest FY25 Australian superannuation news that directly impacts employers. From increases in the superannuation guarantee rate to changes in contribution caps, the introduction of 'Payday Super,' and other significant legislative shifts, understanding these developments can help you navigate the complexities of superannuation compliance. 

By staying ahead of these changes, you can streamline your payroll processes, support your employees, and ensure your business remains compliant and competitive.

All information contained in this article is accurate as of 25.08.2024. For the most up-to-date information, please refer to the Australian Taxation Office.

Increase in superannuation guarantee (SG) rate

As of 1 July 2024, the superannuation guarantee rate in Australia increased from 11% to 11.5%. This change is part of the government's efforts to boost retirement savings for Australian workers.

Employers need to update their payroll systems to reflect the new 11.5% rate, as they must now pay $11.50 for every $100 of an employee’s ordinary time earnings (OTE). This increase can significantly impact businesses with large payrolls, requiring careful budgeting and financial planning. 

The upcoming rise to 12%, which you can expect to take place in July 2025, will further elevate these expenses, making proactive financial management essential to stay within the budget for the next financial year.

Find out more about the changes to the superannuation guarantee

Changes in contribution caps

As of 1 July 2024, changes to the concessional contributions cap and non-concessional contributions also came into effect. The concessional contributions cap saw an increase from $27,500 to $30,000. This cap applies to pre-tax contributions like employer contributions and salary sacrifice. The non-concessional contributions cap also saw an increase from $110,000 to $120,000, allowing individuals to contribute more after-tax income into their superannuation accounts.

These increased caps offer employers an opportunity to enhance employee benefits by encouraging higher salary sacrifice contributions. Employers should update payroll systems to reflect these changes and communicate them to employees, helping them make informed decisions about their retirement outcomes. Monitoring contributions is vital to avoid exceeding the caps and facing tax penalties.

Introduction of 'Payday Super'

By July 2026, the Australian government plans to introduce 'Payday Super,' requiring employers to make superannuation contributions simultaneously with each pay cycle, rather than on a quarterly basis. According to the Australian Government Treasury, this initiative is designed to improve the integrity of the superannuation system and enhance employees' retirement savings.

The shift to 'Payday Super' will require employers to adjust their payroll systems to handle super contributions with each pay run. Automating these payments will be essential to comply with the new regulations. Employers may need to upgrade their payroll software and train payroll staff to manage superannuation payments more frequently. Failure to comply could lead to penalties from the Australian Taxation Office (ATO) and other compliance risks.

Superannuation for young Australians

Recent discussions and proposals aim to increase superannuation engagement among young Australians, encouraging them to start saving for retirement earlier.

Push to lower the superannuation eligibility age

One of the key topics in recent superannuation news in Australia is the push to lower the eligibility age for superannuation contributions from 18 to 16. New research shows that most Australians support this change, which would enable younger workers to accrue superannuation earlier, provided they earn over $450 per month. This push aims to help young Australians build their superannuation balances sooner, benefiting from compound interest and growing their retirement savings more effectively.

While these changes are still in discussion, employers should stay informed about the potential impact on payroll processes. If the eligibility age is lowered, employers will need to adjust their payroll systems to track and process super payments for younger employees accurately.

Expansion of the First Home Super Saver Scheme

The First Home Super Saver Scheme (FHSSS), designed to help first-time homebuyers save for a deposit using their superannuation, now offers expanded options to boost engagement among young Australians. The contribution limit increased, allowing individuals to make up to $50,000 in voluntary contributions for a home deposit, compared to the previous cap of $30,000. This increase offers a tax-effective way for young Australians to save for their first home while actively engaging with their superannuation funds.

Promoting the expanded First Home Super Saver Scheme can enhance employee engagement and satisfaction, showing a commitment to supporting employees' long-term financial goals and increasing home ownership among young Australians.

Paid parental leave and superannuation

From July 2025, the Australian government will start making superannuation contributions on government-funded paid parental leave. This policy aims to address the retirement savings gap created by career breaks for childcare.

By including superannuation in paid parental leave, the initiative helps parents maintain their retirement savings even while taking time off work for family care. This support is especially imperative for women, who often take on primary caregiving roles, enabling them to build higher superannuation balances over their careers and promoting greater financial security in retirement. It's a significant step toward reducing the gender gap in retirement savings.

Although the government will fund these contributions, employers should inform their employees about the policy change. Employers might also consider implementing superannuation contributions for their own parental leave schemes, enhancing support for employees’ long-term financial wellbeing and demonstrating a commitment to gender equality.

Increased support for managing superannuation through technology

The Australian government is increasingly leveraging technology to improve the management of superannuation, making it easier for employers to comply with reporting requirements and streamline their payroll processes.

Expanded use of Single Touch Payroll (STP)

STP offers a streamlined way for employers to report their employees' tax and superannuation information to the ATO. With recent expansions, STP now requires more comprehensive reporting, including detailed information about superannuation contributions. This advancement aims to ensure that employers pay super contributions accurately and on time, reducing the risk of unpaid super and enhancing transparency.

By utilising STP, employers can automate their superannuation reporting, reducing administrative burdens and minimising the potential for errors. The integration of STP data with superannuation fund systems also allows for real-time tracking of contributions, providing employees with greater visibility into their retirement savings and ensuring compliance with superannuation regulations.

Government initiatives to support superannuation management

In addition to STP, the government has introduced several initiatives to support the use of technology in managing superannuation. These include:

• Improved online platforms: The ATO has enhanced online services to make it easier for employers to manage superannuation obligations, access compliance resources, and view contribution details.
• Data matching programs: The government is increasingly using data matching techniques to identify discrepancies in superannuation reporting, ensuring that employers meet their obligations and that employees receive their entitlements.

By adopting modern payroll software that integrates with STP and other government platforms, employers can streamline their reporting processes, reduce compliance risks, and provide better support for their employees' financial wellbeing.

Stay ahead of the superannuation curve with Rippling

Navigating the ever-evolving landscape of superannuation can be challenging, but staying ahead of the curve is key to maintaining compliance while supporting your businesses growth. With Rippling’s automated and integrated all-in-one HR and payroll solution, you can seamlessly adapt to legislative changes, manage superannuation contributions effectively, and reduce the administrative burden, keeping your business focused on strategic priorities.

• Streamline Standard Choice Form distribution and collection: Rippling integrates the distribution and collection of the Standard Choice Form into its onboarding process, making it easy for new employees to select their preferred superannuation fund. This saves time and ensures you maintain compliance from day one, allowing your business to onboard new hires efficiently.
• Keep compliance on track with automated updates: Rippling’s system continuously updates to accommodate changes in superannuation rates and contribution caps, keeping your business aligned with the latest regulations without the need for manual updates. This automation simplifies regulatory adherence.
• Simplify superannuation calculations: Rippling automatically calculates and submits superannuation contribution data to the super clearing house (SuperChoice) with each pay run. This process ensures contributions are accurate and timely, reducing errors and minimising the need for manual intervention, thereby freeing up your payroll team for other critical tasks.
• Efficiently handle errors and reprocess payments: If superannuation contributions are rejected, Rippling automates the refund process, returning funds to a designated Australian bank account and enabling prompt re-attempts. This approach minimises disruptions and streamlines the allocation process, ensuring that contributions are properly managed without added stress for your team.
• Make quarterly payments with ease: Rippling facilitates quarterly superannuation payments through the ABA file option and synchronises with the ATO’s reporting deadlines. This functionality ensures that compliance is straightforward and payment processes are simplified, saving time and reducing the risk of missed deadlines.
• Manage reporting and record-keeping: Rippling integrates with the ATO’s SuperStream system for seamless reporting and maintenance of accurate records, helping you stay prepared for audits and effortlessly meet compliance requirements. This comprehensive integration reduces administrative workload and improves accuracy in reporting.

Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.