Private sector workers losers of SG increase

This blog has been picked up by the Media in Money Management and their sister publication Super Review.  Click here or on the Money Management Logo below to be taken to the article in Money Management.  Click here or on the Super Review Logo below to be taken to the article in Super Review.

Most private sector workers don’t want a superannuation guarantee increase (SG Increase) as they will suffer a pay cut if they are pushed through.

If you look at non-unionised private sector workplaces, the employer does not typically want to beholden to the federal government about what pay increase an employee should get.  So it is common to see in a person’s employment agreement, the reference to a total remuneration package, inclusive of superannuation, that an employee is paid.

That means that if SG increases are pushed through, the employee will get paid less salary.

For example, on a remuneration package of $60,000 per annum inclusive of superannuation, this is how the employee would fare if compulsory super was increased to 12 percent.

You can see why the financial services industry want the SG increase.  They get a 23.5 per cent increase in contributions before tax and probably a 20 per cent increase in fee income.

But the employee has their annual salary reduced by $1,223.09.

Which non-unionised private sector workers wants to have their take home pay reduced by 2.2 per cent today, on a politicians promise of more super in the future?

Very few people.

And that’s why most private sector workers don’t want superannuation guarantee increases.

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Wayne Wanders

The Wealth Navigator

wayne@thewealthnavigator.com.au

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