Nicole Gardner, founder of Stellar Wealth and a reputable financial adviser, asserts that the 0.5 per cent rise, while seemingly minor at first glance, is set to play a pivotal role in boosting retirement savings, particularly through compounding effects for younger workers. Her breakdown on social media illustrates that a person earning $60,000 annually will see their super payments increase from $6,900 to $7,200. For average full-time workers earning over $100,000 a year, contributions will rise from $11,500 to $12,000. Higher salary brackets will also experience similar boosts.
This increment marks the culmination of gradual increases meant to ensure Australians have adequate retirement funds, a goal long accepted by the government and economists.
Despite the positive outlook, Gardner notes some nuances that warrant attention. She highlights that employees on fixed salary packages inclusive of super may witness a reduction in pay, as their contribution compensates for the increased guarantee. Additionally, those engaging in salary sacrificing into super need to be vigilant about not exceeding the $30,000 concessional contributions cap, as any excess would incur additional taxation.
The Australian superannuation landscape comprises over 24 million accounts with assets totalling $4.2 trillion. However, despite these figures, the current average balance for retirees falls short of the recommended benchmark for a comfortable retirement, according to the Association of Superannuation Funds of Australia.
Compounding this concern, recent findings by Finder reveal that a significant portion of Australians remain uncertain about the adequacy of their retirement savings. This new change, however, is expected to make a "substantial difference," particularly for those starting their careers, via compounding interest, even should they not make extra contributions.
Future considerations emphasize the strategic advantage of salary sacrificing within limits and ensuring employers meet their obligations promptly. Financial expert Pascale Helyar-Moray advises that even minimal additional contributions can enormously impact over time, highlighting the untapped potential of compounding interest.
