rld1177

With the new Super rules I noticed my take home pay was adjusted down in my latest pay check. Not a big deal but just curious if other employers are doing the same or giving people a slight raise to offset the new super rules? If there is a .5% hit on take home pay across the board though you'd think this would have a slight negative short term drag on the Australian economy - if you were on 100K including super you'd now have a few hundred less per year to spend on critical purchases like 7$ coffee's and 15$ pints of European beers in Melbourne for example.

So, were most given a take home pay cut or was this just something evil that occurred to those of us in the banking sector?

Dreamy

It's really going to depend on how people's pay packages are worded - if you're on $x+super then you won't get a paycut, if you're on $x inc super then I would reckon most employers will let the employee bear the rate increase (that's what's happened in most of the OH's sector)

Because of the way it's being phased in, I doubt most people would really notice a big difference in their pay packets on a monthly basis, though.

Did you not get a letter of explanation about the changes from your employer? Everyone across OH's company received a letter with a chart giving examples of how much they'd be losing, a good month or so ago.

rld1177

That makes sense. Forced savings for retirement is a pretty good idea long term for Australia (I wish we'd done that in America years ago) - BUT with the economy having trouble a bit already with the China and commodity slowdowns, pulling cash out of take home income could have a short term negative impact (depending on how employers handle it, of course). It will be, however, a good thing for the financial sector, more forced savings going in to Super funds which the industry can invest and take a cut from....

ABCD......

I wonder how legal this is for an employer to make the employee pay for it.

The Superannuation Guarantee (SG) is a compulsory system of superannuation support for Australian employees, paid for by employers. The system was introduced in 1992.

Obviously if you have a contract that states that your salary package total includes your superannuation entitlements, then by accepting that contract, you have accepted it. Simple.

But, if your contract does NOT specifically say that, then the employer may be stepping over the legal line.

Expect to be asked to sign a new contract soon

verystormy

Yep. I will lose 0.5% of salary now as my contract says it is inclusive of super. All the jobs i have had in Oz say this.

I am very mixed on if i agree with super. I think the system of getting people to invest in their retirement is good. But the current system is not working. My last statement shows that i would have been better off just putting money in the bank

the troubadour

I went backwards for a couple of years when the share market was on a downer, so not overly convinced by super. It's just another method of investment which will hopefully be worth something in retirement.

commonwealth

My company will pay for the extra super even though my employment contract says salary is "inclusive of super".

commonwealth

The major benefit of super v other investments is the tax benefit. You pay only 15% tax. That's why those who are good at actively investing would set up SMSFs and they contribute up to the concessional amount to take advantage of the tax benefits.

rld1177

One way to look at this - as it appears some employers are covering super and others are not - is that one way or the other you are paying for it. For example , if the company throws in for the extra .5% you can be quite sure annual raises will also be adjusted. I certainly plan to note I've had a slight take home pay-cut. (Not that I expect much of a raise either!)

Beyond that though, I wonder what net impact it would have on the Australian economy - it is def. at least a slight net drag as this becomes future spending cash many years in the future vs today.

commonwealth

Depends on the company's performance and budgets as well. Our bonus and compensation pool is based on Asia-Pac performance.

DadAgain

I just checked - and my net pay has not changed.

I think I remember my contract being worded "$X per year + superannuation".

swans

Erm not really,super is a con with the non stop repetition of tax benefits as the carrot,everybody repeats it, BINGO.

Keeping it out of super is probably better,for example say CBA costs $100 per share,to buy this in super costs around $117 of before tax income ($100 minus 15% approx $100).

Various strategies are thus,borrow $100,pay the interest say$6,get 32.5% of that back from ATO,and collect $3.61 in dividends.Leverage up and use the dividends to pay the interest,wealth is always free.

Pick any whole number you like $10,20,30 etc as a starting point.Start at $30,a record high around around 2001 for CBA.Take an average interest rate of 7% over the 12 yrs since.Your outlay of 30k to buy 1000 shares costs you $2100 per year in interest,say $1500 after tax,far less than goes into super.

Take an average dividend of $2 per year,put that into the bank,so you have $24k plus interest in the bank.The shares are worth around $70K now,good steady plodding growth,perfect.Your outlay obviously is $18k ($1500 x 12),so the returns will always be far greater than super will get.Reinvesting those dividends would mean you have 2000 shares in CBA,so your outlay of $18k produces $140k now.The bonus is the thieves in the financial industry get no money out of you.CBA also hit $30 around april 2009,the excuse to use not to buy when they are cheap is "catching a falling knife', the financial industry keeps repeating it so it is burnt onto everbodies brain and must be great wisdom.When the next crash comes you'll hear it a lot, and see it on the board a lot,and it means the financial industry keeps getting their pound of flesh for evermore.

geordie downunder

Amazulu

Super has many problems but as a macro-economic policy and a way to force people to save for retirement, it's fantastic. Without super many would not save and therefore become a burden on society and the economy

$1.3t (and growing) invested, 4th largest system in the world - for 23m people. It's good

DeepSix

just checked.. my new contract on excluding super says

"superannuation will increase on 1 july 2013 to 9.25% and on 1 july 2014 to 9.5%. These increases will be absorbed by the employer and will not result in a change to the employee's base salary"

so all round good news there

ABCD......

For other people though, that $100 worth of shares (costing $117 of before tax income) will cost between:

$135 for those earning $37k to $80k
or
$147 for those earning over $80k

of 'before tax' income.

I personally believe in managing my own super, but many people would not do it, and prefer to rely on anyone else.

Before the Compulsory Super came in, very few people did pay any super voluntarily, even though they had the option.

I do feel that in the circumstances, what we have is the lesser evil.

But at least we do have the option, if we wish, to choose how it gets invested, to a degree.