From 1 July 2025, the compulsory superannuation rate—commonly known as the Super Guarantee (SG)—will increase from 11.5% to 12%. This marks the final increment in a series of scheduled rises introduced by the Australian Government and administered by the Australian Taxation Office (ATO Super), aimed at boosting Australians’ retirement savings.

A Look Back: The Incremental Path to 12%

The SG rate has been gradually rising since 2021, increasing by 0.5 percentage points annually. This strategic phasing was designed to give businesses time to adapt while helping Australian workers build a more secure financial future.

What This Means for Employers

Starting 1 July 2025, employers will be legally required to contribute 12% of an eligible employee’s ordinary time earnings to their nominated superannuation fund. This change applies to full-time, part-time, and casual employees over the age of 18, as well as those under 18 who work more than 30 hours a week. Key considerations for businesses include:

• Payroll Updates:Ensure payroll systems are updated to reflect the new SG rate before the 1 July deadline.
• Employment Contracts: For employees on total remuneration packages, review and confirm how the SG increase affects their take-home pay.
• Budgeting Impacts: The increase may affect labour costs, especially for businesses with large workforces, so it’s important to review financial plans accordingly.

Benefits for Employees

This rise in SG contributions is great news for Australian workers. Over time, the compounded growth in super balances will provide a stronger foundation for retirement, potentially reducing future reliance on the Age Pension.

Planning with LMHR Consulting

Navigating superannuation changes can be complex, but LMHR Consulting is here to help. We offer tailored advice to ensure your business remains compliant, your payroll processes are seamless, and your team is well informed. If you have questions about how this change impacts your business or your employees, reach out to LMHR Consulting today. Let’s make the transition smooth, strategic, and stress-free.