When should you pay an interest in superannuation
An individual 66 years of age in the year 2020 who started work in 1970 at age 16, worked without a compulsory super fund in Australia for 22 years. The first 11 years since the implementation of the Superannuation Guarantee on the 1st of July 1992 required the employer to pay the following percentages for each year ending on June 30 of that year;
3% until June 1994
4% until June 1995
5% until June 1996
6% until June 1998
7% until June 2000
8% until June 2002
from July 1 2002 the figure remained at 9% until 2013, which was not the plan, but don’t get sad, it increased to 9.25% for the 2013/2014 Financial Year. If you ever want to refer to something that happened between the 1st of July 2013 and the 30th of June 2014 you can say it happened when the Superannuation Guarantee percent was 9.25% and wait for everyone to get it.
Probably to keep things simple the percentage was increased to 9.5% and remained that way from the 1st of July 2014 through to the 30th of June 2021, but increases are on their way again, or may be in place depending on when you are reading this. 10% legislated superannuation guarantee contributions from employment begin on the 1st of July 2021. These increases continue at a rate of half a percent each year until it reaches 12% and remains at this rate until 2028 and ‘onwards’.
It is presently days away from the percentage increasing to double digits for the first time and the responsibility being with you, albeit through a superannuation fund, which is impacted by national and international markets to best monitor and manage your account. The importance of personal financial planning is beautifully summarised in the book Financial Planning 2nd Edition by Mckeown, W, Kerry M & Olynyk M 2017 “The major reason for the increased importance of personal financial planning is the transfer of risk for providing for one’s old age from the Government (age pensions) and employers (defined benefit super schemes) to individuals.”
Defined benefit super schemes are or for most of us were guaranteed monies for the employee by the employer upon retirement depending on length of employment, contributions to the scheme and your salary upon retirement, simply put, assured income payments from your employer to provide for you in retirement, good luck getting that now.
