About 8.8 million Australians will benefit from a boost to their nest egg as the Super Guarantee rate increases from 10.5% to 11%.
From July 1 an extra $330 a year will flow into the super accounts of the typical Australian worker.
This year’s super boost may be small, but it will make a big difference to a worker’s nest egg – with a 30-year-old on the median wage expected to have an extra $18,300 at retirement due to the super rate lifting 0.5% on July 1.
The Super Guarantee rate is legislated to rise to 12% by 2025 by annual 0.5% increases.
Super Australia Chief Executive Bernie Dean said the increases will add up in time.
“Come July 1 the super guarantee will increase to 11%, another small step on its way up to 12% by 2025 that will make a huge difference when workers put their feet up at retirement.
“Even though the staged increases are small, they’ll add up to so much more in savings and that means a more secure future for millions of Australians,” he said.
The bipartisan commitment to 12% super, will deliver an extra $48,600 for the typical 30-year-old worker’s retirement balance.
The biggest benefactors of the July 1 are the young and those on lower incomes, as:
More than half of those benefiting from the increase are under 40 and more people in their 30s will get a super boost than any other age bracket.
60% of those benefiting from the increase earn less than $75,000 a year.
And 35% earn less than $50,000 a year.
Now in its 31st year the Superannuation Guarantee is a critical response to the ageing population and improves retirement incomes of working people in a fiscally sustainable manner. It has allowed millions of low to middle income earners to save for retirement when otherwise they would not have.
People nearing retirement now have an average of $350,000 but rewind to 1992 and only 10% of retirees had super as an income source.
However, it’s the younger generation that Mr Dean said will benefit the most from these increases.
“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,” he said.
Industry Super Australia analysis shows that a 30-year-old on the median wage will have an average super balance of $500,000 at retirement.
In 30 years super has grown to a $3.5 trillion savings pool that outstrips nominal GDP, is more than the market capitalisation of the ASX, has transformed Australians capital markets, and has turned around Australia’s current account.
