The Super Guarantee is going up to 10.5% on July 1 2022 - Raiz Invest

There’s big news when it comes to your super. The law is changing on the super guarantee – the contribution your employer is required to make into a super fund on your behalf. On July 1st 2022, the mandatory amount of your pre-tax income that goes into your super will increase from 10% to 10.5%. Here’s how that could help you in the long-term.

Super benefits from the compounding effect of returns

It might not sound like much, but investing an additional 0.5% of your pre-tax income has the benefit of being able to take advantage of compounding returns. The beauty of compounding returns is that as your balance grows, your entire larger balance stands to benefit from positive market returns over time. There may be times in your career where you choose to make voluntary contributions, and this will keep ticking your super balance higher.

 

Consolidating your super could save you multiple fees over the long-term

Paying multiple super fees could erode your balance over time, and over many years the compound effect of this amount could become an unnecessary cost to your future nest-egg. There’s no need to waste the extra 0.5% via unnecessary fees, so take a look at if you can consolidate, and protect your future super.

 

Super means you are investing automatically at regular intervals

The beauty of your super contributions is that they happen without your direct input, taking a fair bit of the decision making and emotion out of the equation. So whether its 10.5% or more, it is happening regularly throughout the year, meaning you are taking part across different stages of the market cycle, and for the long-term

 

What if I am on a salary inclusive package?

If you are on a superannuation-inclusive salary package, your take-home cash payments will be reduced by 0.5% per pyear due to  the Super Guarantee increase. For example, an employee on a $60,000 superannuation-inclusive salary package will currently have $6,000 going into their superannuation fund each year. When this increases to $6,300 from 1 July, their take-home pay will reduce by $300 each year.

For those on a salary plus super pay package, it’s good news!  From July 1 2022, you will now receive an extra 0.5% a year from your employer in your total compensation package, with the extra 0.5% directed to your chosen super account.

If unsure, you should check with your employer which one of the above applies to you.

 

When is the Super Guarantee going to change again?

The Super Guarantee is set to go up by 0.5% every year on July 1st until it reaches 12% on 1st July 2025. That means on 1st July 2023, that percentage will be going up from 10.5% to 11%.

 

It’s your super

It’s your long-term investment, and that’s why you need to carefully consider decisions regarding your super, whether its consolidating funds, opting into insurance, or determining your risk tolerance.

All investments carry risk.

To see if Raiz Invest Super is suitable for you, please read the PDS.

For information on Raiz Invest Fees, click here.

 


 

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The risks and fees for investing are fully set out in the PDS and include the risks that would ordinarily apply to investing. You should note, as illustrated by the global financial crisis of 2008, that sometimes  not even professionals in the financial services sector understand the ordinary risks of investing – because by their nature many risks are unknown – but you still need to give it a go and try to understand the risks set out in the PDS.

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