Minister for Employment and Workplace Relations Bill Shorten insists that, rather than constituting a ‘tax on business’, the super increase
will be covered by ‘deferred wage increases’ worked out between employers and employees during wage negotiations.The real challenge
for HR departments, then, will be in communicating the change. Will they build the SG increase into the overall wage increase each
year? This will depend on how well they can communicate to staff that super is, in fact, part and parcel of their remuneration. The
challenge will be greatest in companies or industries where pay is usually expressed and perceived to be net of super.
A recent survey revealed that 95% of workers believe that job salaries should be advertised as base salary figure plus super and not as a total remuneration package. For most employees, super is seen as an “obligatory payment” from the employer rather than a legitimate component of a salary package. |
This would suggest that it’s going to be an uphill battle for employers to convince workers (especially young ones) that their future wage increases will include a superannuation component, when most people only look at how much hits their bank account every pay period..
Another challenge for HR professionals is that the attitudes towards superannuation can vary greatly across industries. In the traditional white-collar industries of banking and accounting there is a better understanding of total remuneration packages as being an overall cost to the employer whereas other industries such as tourism and hospitality there is a focus on cash and super is barely on the radar.
There is no denying that the impact of these changes can be huge for businesses and yet, according to a survey by Aon Hewitt, many employers have not yet fully considered the effect it will have and have also not prepared themselves to avoid fines for non-compliance.
Aon Hewitt questioned 160 Australian companies about superannuation, which produced these interesting results:
- 58% of employers were yet to determine their response to the SG hike
- Of the 29 per cent of companies currently paying above the SG, only 11 per cent planned to stay the same amount ahead of the minimum when it went up, whereas 32 per cent expected to absorb the increase
Aon Hewitt senior consultant and actuary Ashley Palmer said “”Broadly speaking, those who use a remuneration packaging method may be passing the cost on to employees, while employers who use the base-plus approach will be bearing the increase themselves,”
So, what to do now?
- If not already accounted for, the increases will need to be factored into your business’ budgets going forward.
- Start thinking about how the increased level of SG contributions will affect remuneration packages from 1 July 2013
- Consider any implications for employment agreements and remuneration packages, and this may require employers to review all staff contracts. Employers may need to seek legal advice in this area.
- Ensure that their payroll systems are configured to remit the increased contributions to each employee’s superannuation fund.
- Consider any older workers aged 70 or more, as SG contributions will need to be made for them from 1 July 2013.
- Be mindful of the concessional cap of $25,000 which from 1 July 2012 applied to all employees.
Prosperity Wealth Advisers is one entity within the Prosperity Advisers Group which spans three office location.
Disclaimer: Prosperity Wealth Advisers ABN 32 141 396 376 is an Authorised Representative and Credit Representative of Hillross Financial Services Limited, Australian Financial Services Licensee and Australian Credit Licensee Ph. 1800 445 767. Any advice contained in this document is of a general nature only and does not take into account the objectives, financial situation or needs of any particular person. Before making any decision, you should consider the appropriateness of the advice with regard to those matters. If you decide to purchase or vary a financial product, your advisers, our firm, Hillross Financial Services Limited, its associates and other companies within the AMP Group may receive fees and other benefits, which will be a dollar amount and/or a percentage of either the premium you pay or the value of your investments. Ask us for more details. If you no longer wish to receive direct marketing from us please call us on the number in this document and if you prefer not to receive services information from AMP, you may opt out by contacting AMP on 1300 157 173.
