1 July 2025 marks a significant milestone for Australian workers’ retirement savings. The superannuation guarantee rate has increased from 11.5% to 12%, representing the final step in the gradual increases that have been building your retirement nest egg over recent years.
What could this mean for you?
This 0.5% increase might seem small, but it translates to real money in your pocket, or rather, your super fund. Employers must now contribute 12% of ordinary time earnings to your super fund, which means more money working for your future retirement from every pay.
For someone earning $80,000 per year, this increase means an additional $400 annually going into their super, money that will compound over the decades. Over a typical working career, this seemingly modest increase can add tens of thousands of dollars to your final retirement balance.
What happens if your salary package includes super?
Not everyone will see the same direct benefit from this increase. If you have a salary package where your super contributions are part of your total package, the increase in the super guarantee rate may slightly reduce your take-home pay, as more of your package is now directed to super.
While this might feel like a short-term reduction in your cash flow, it’s important to remember that this money is still yours; it’s simply being directed toward your future rather than your present.
Why you should talk to your financial adviser
While the change is automatic and your employer will handle the compliance side, there are several ways you can potentially make the most of this:
- Salary sacrifice opportunities: With your employer now contributing more, you might want to review your salary sacrifice arrangements. Your adviser can help you determine if it makes sense to contribute extra pre-tax dollars to super while staying within contribution caps.
- Investment strategy review: More money flowing into your super means it’s a good time to review your investment strategy. Are you in the right investment option for your age, risk tolerance, and retirement timeline?
- Contribution caps and planning: This increase will bring you closer to the annual non-concessional contributions cap, as this cap remains unchanged for the 2025/26 income year. Your adviser can help ensure you’re not inadvertently exceeding the cap, especially if you’re also making voluntary contributions.
- Retirement planning: With higher super contributions, your retirement outcome will improve. It’s worth updating your retirement plan to see how this affects your expected retirement income and whether you need to adjust your savings strategy.
- If your total salary package includes super: You will notice a slight reduction in your take home pay. However, the reason for this is that your super contributions have increased. Your financial adviser can help you understand how this trade-off affects your overall financial position and whether you might want to adjust other aspects of your budget or savings or annual super contribution strategy to compensate.
Take Action Today
Taking an active approach to your super can be beneficial. You may want to contact us to discuss:
- How this increase affects your personal retirement projections.
- Whether your current super fund and investment options are still the best fit.
- Opportunities to review your voluntary contributions and/or your cashflow needs if your salary package includes super contributions.
- Whether any changes are needed to your broader financial strategy.
Your future self will thank you for taking an active interest in your superannuation today. The combination of higher employer contributions and smart financial planning can significantly boost your retirement outcomes.
Remember: This increase is just one piece of your retirement puzzle. Professional financial advice can help you make the most of this opportunity and ensure you’re on track for the retirement you want.
The information contained in this article is general information only. It is not intended to be a recommendation, offer, advice or invitation to purchase, sell or otherwise deal in securities or other investments. Before making any decision in respect to a financial product, you should seek advice from an appropriately qualified professional. We believe that the information contained in this document is accurate. However, we are not specifically licensed to provide tax or legal advice and any information that may relate to you should be confirmed with your tax or legal adviser.
