Superannuation rise from July 1: what age group gets the most?

More superannuation will go into millions of Australians’ life savings from this weekend, and some benefit more than others.

This week’s rise in compulsory employer superannuation contributions will deliver a typical worker an extra $330 a year, a new analysis has found.

Industry Super Australia has examined Bureau of Statistics and Australian Taxation Office data to find that people aged between 40 and 49 get the biggest immediate financial gain, while younger workers enjoy the largest long-term benefits.

It said the July 1 rise from 10.5 to 11 per cent of wages would lead to an extra $18,300 at retirement for a 30-year-old on the median wage of $65,000.

Industry Super Australia’s analysis comes as separate research from super fund Australian Retirement Trust found nearly three quarters of people do not know the current Superannuation Guarantee (SG) rate.

The SG rise is part of annual 0.5 percentage point increases that will take total SG to 12 per cent by July 2025.

Industry Super Australia deputy CEO Matthew Linden said the overall rise to 12 per cent super would deliver a typical 30-year-old worker an extra $48,600 at retirement.

“Even though the staged increases are small, they’ll add up to so much more in savings,” he said.

“The big winners for the Super Guarantee increase are those younger workers on lower incomes, who have years left in the workforce to watch that compound interest grow.

“For a person commencing work in their early twenties, around 75 to 80 per cent of their final balance is due to compounding of investment returns.”

Tribeca Financial CEO Ryan Watson said employees were the biggest winners from the changes, and super funds would benefit too as they received “more money being invested on their platforms”, but employers were the losers.

“Employees will expect the superannuation guarantee rise to not affect their take-home pay packet … employers will end up paying higher overall remuneration packages,” he said.

“Employees need to review their current employment contract to understand whether any SG increases are a part of or in addition to their current remuneration package.”

Mr Watson said increasing compulsory super improved Australians’ retirement balances and reduced the need for the age pension.

“In an ideal world, each person would have a compulsory rate of 15 per cent into their superannuation fund over the lifetime of their employment,” he said.

“Heading towards 12 per cent is certainly a significant improvement.”

Australian Retirement Trusts’s YouGov survey of more than 2000 people found 71 per cent did not know the current SG rate was 10.5 per cent. Chief executive officer Bernard Reilly said people should remember that super “is your money, to help your retire well”.

“As I say to my kids, do something today that your future self will thank you for,” he said.

“It’s important to take note of where your super is going and how it’s working for you. Review your super fund, including investment performance and fees, to check if it’s still right for you.”

Industry Super Australia deputy CEO Matthew Linden. Picture: Supplied

Industry Super Australia’s analysis found that workers aged 40 to 49 would get the biggest immediate increase in SG, averaging $402 a year.

“Wages tend to increase up to the mid-to-late 40s due to career progression and then start to decrease as people transition to retirement with reduced hours over the course of the years and as those with the sufficient financial means retire early,” Mr Linden said.

Compulsory super started 30 years ago, when only 10 per cent of retirees had super as an income source. That figure has jumped sharply to build the nation’s current $3.5 trillion savings pool.

“Around three-quarters of individuals aged 60-64 have superannuation, but around about 90 per cent of individuals aged 30 to 50 have superannuation,” Mr Linden said.

“The percentage of retires will continue to rise slightly over the next 15 years or so as this cohort reaches retirement age.”