It’s the biggest change in superannuation in decades. But what tens of thousands of workers weren’t expecting was that it could mean a cut in take home pay.
From July 1, your employer’s contributions to your super goes up 0.5 per cent. Great news for some. But not all of us.
If your contract involves phrases like “total remuneration package” or “total package value” or “remuneration inclusive of superannuation” then you can probably expect a pay cut to be heading your way, as companies will simply take 0.5% of your pay and reallocate it into your super.
Companies that are relying on that language and may be about to cut your pay include:
- Macquarie Group
- Goodman Group
About 12,000 ANZ staff from head office will have the increase taken out of their base salary and Telstra employees who aren’t covered by enterprise agreement will also suffer a cut to take home pay.
If you work for Scentre Group or AGL they will also be taking the increase out of base pay.
A Mercer report from May surveyed 145 companies and results showed that more than half of these companies used employment agreements that operate on total remuneration instead of base salary plus super.
Of that half, two out of three intend on employees covering at least some of the increased cost.
Furthermore, 40% of Australian workers are on individual agreements. If this is you, whether you are about to receive a pay cut will depend on the wording of your contract, unless your employer voluntarily covers it.
The super guarantee is also legislated to continue rising, meaning that discussing the wording of your contract and negotiating where the guarantee will be paid from will be an important protection measure for employees over the coming years.
Superannuation Minister Jane Hume tells the Sydney Morning Herald that the government is aware of the trade-off between lowered wages and increased super.
“Despite months of Labor and Industry Super Australia denying the trade-off between super increases and take-home wages … the government has always been very aware that there is in fact a trade-off.”
“The government weighed this trade-off carefully against the economic data prior to the budget.”
Labor superannuation spokesperson Stephen Jones told Sydney Morning Herald that the super increase being deducted from base salary represented poor treatment of employees.
“It’s a pretty miserable way to treat your employees, most of whom will have been on a wage freeze for a long period of time.”
“The government should make a very clear statement on to businesses that they should not cut people’s wages to pay for the Superannuation Guarantee levy that has been know about for in excess of eight years and delayed for seven years.”
Mr Jones continues that he has never denied that there’s a link between superannuation and lowered wages but the idea that every dollar of superannuation is a dollar less in wages is “plain wrong.”
Find out more:https://www.ato.gov.au/rates/key-superannuation-rates-and-thresholds/?anchor=Superguaranteepercentage