Higher super contributions to boost super savings by $125,000

A significant change to the compulsory superannuation contribution system starting today, means that all employees will start receiving super compulsory super contributions at the rate of 12.5 per cent up from 12 per cent previously.

This is effectively a pay rise of 0.5 per cent across the board for all Australians who are currently employed and receiving payment for their labor, even though you won’t see these extra dollars as they will be paid directly into your super account.

This is a significant benefit, and it will be further enhanced this time next year, when the Federal Government will apply new measures that will ensure super contributions are paid at the same time as wages.

This will make the process a lot more transparent. It should also lead to a drop in employers not paying their super contribution obligations and it will also lead to higher super balances as each account will receive more frequent contributions.

It is important though that before then, that all employees check to ensure they have received this increase payment of their superannuation entitlements even though they probably will not see this payment in their super account until the middle of October.

This is because employers at the moment are not obliged to make their super contributions until the middle of the following quarter that you receive your wages or salary. So, I suspect that many will fail to check their contributions have increased.

If you feel that you are not receiving the correct super contribution from your employer or are not receiving any payments at all, it is a very simple matter of raising this with the Australian Tax Office and they will investigate on your behalf.

The penalties on employers who do not meet their superannuation obligations are quite severe. For employers who do the right thing, they can claim their superannuation contributions made on behalf of employees as a tax deduction and so reduce their overall tax bill.

Employers who fail to do the right thing lose this ability to claim contributions as a tax deduction and instead, face significant penalties.

One of the biggest problems with super is that people feel completely disconnected from it. Most people feel that it’s been forced on them, that they don’t understand it and they just have a sinking feeling that someone is making a lot of money out of, it’s just not them.

If you have your super on a quality super platform such as Netwealth, you can easily go online and check on a regular basis, what your super balance is and what contributions have been made to it.

I urge you to do this on a regular basis and if you can’t regularly check these two things online, then you should change your super account.