Lexi Webster
In Australia, superannuation, or super, is a savings system for workplace pensions in retirement. It was introduced by the Hawke government in 1992 to promote self-funded retirement savings and reduce reliance on a publicly funded pension system. The Australian government controls and legislates the superannuation guarantee, which dictates the minimum percentage of an employee's earnings that an employer must contribute to their super fund. The guarantee is enforced by the Australian Taxation Office (ATO), which provides advice and information on tax requirements and superannuation.
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What You'll Learn
Superannuation Guarantee (SG) rate
The Superannuation Guarantee (SG) dictates the minimum percentage of an employee's earnings that an employer must pay into their superannuation fund. The SG rate is controlled and legislated by the Australian Government and is subject to change.
The SG contribution amount is calculated as a percentage of each eligible employee's ordinary time earnings. This is paid into a complying super fund or retirement savings account (RSA). The SG rate an employer must pay depends on the financial year. From 1 July 2024, the SG rate increased to 11.5%. This will further increase to 12% from 1 July 2025.
If an employer does not pay the required rate of SG into their employee's superannuation fund by the quarterly due date, they may have to pay a Superannuation Guarantee Charge (SGC) to the Australian Taxation Office (ATO). The SGC includes all the SG amounts owing to employees, plus interest and an administration fee. Employers who do not pay the SG into the correct super fund by the due date must report and rectify the missed payment by lodging an SG Statement and paying the SGC.
Employees can check the ATO's Super Guarantee Eligibility Decision Tool to determine if their employer should be paying SG contributions for them. If an employee is ineligible for SG contributions from their employer, they can still make their own contributions into their superannuation fund.
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Superannuation funds
Superannuation in Australia, or "super", is a savings system for workplace pensions in retirement. It involves money earned by an employee being placed into an investment fund to be made legally available to members upon retirement. The superannuation guarantee, or SG, dictates the minimum percentage of an employee's earnings that an employer needs to pay into their super fund. The Australian Government controls and legislates the super guarantee, which can change over time. As of 2025, the mandatory minimum "guarantee" contribution is 12%.
The superannuation guarantee was introduced by the Hawke government to promote self-funded retirement savings, reducing reliance on a publicly funded pension system. The Keating Government passed legislation to support the introduction of the superannuation guarantee in 1992. The compulsory employer contributions were branded "Superannuation Guarantee" (SG) contributions. The proposed solution was a three pillars approach to retirement income: compulsory employer contributions to superannuation funds, further contributions to superannuation funds and other investments, and, if insufficient, a safety net consisting of a means-tested government-funded age pension.
The Australian Taxation Office (ATO) is the primary enforcement agency for the compulsory super guarantee. The ATO gives advice and information about tax requirements and superannuation (super). The Fair Work Ombudsman gives employers and employees information and advice on workplace rights and obligations, and can provide information on the entitlement to super in the National Employment Standards (NES). The NES entitlement to super aligns with super laws, so if an employer complies with the super guarantee, they will also meet their obligations under the NES.
The Australian Prudential Regulation Authority (APRA) conducts an annual performance test for MySuper products. When a MySuper product fails the annual performance test for two consecutive years, it cannot accept new members until it passes a future performance test. The Small Business Superannuation Clearing House (SBSCH) is a free service that small business owners can use to make their superannuation guarantee contributions. It makes it easy to pay all super contributions online in one payment.
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Retirement income
The compulsory employer contributions are known as the "Superannuation Guarantee" (SG) and are designed to increase the financial security of Australians once they are no longer working. The SG dictates the minimum percentage of an employee's earnings that an employer must pay into their super fund. This percentage can change over time; the Australian Government controls and legislates the super guarantee. As of 2025, the mandatory minimum "guarantee" contribution is 12%. The SG contribution is subject to a concessional income tax rate of 15%.
The superannuation system in Australia allows for fund choice, with employees able to choose the fund their employer's superannuation guarantee contributions are paid into. Employees may change superannuation funds for reasons such as consolidating accounts to cut costs and paperwork, or to access a lower-fee fund. When an employee has not elected to choose their own fund, employers must make "default contributions" into an authorised MySuper product, which is designed to be a simple, low-cost superannuation option.
The Australian Taxation Office (ATO) is the primary enforcement agency for the compulsory super guarantee. The ATO gives advice and information about tax requirements and superannuation, and employers are required to pay superannuation contributions by quarterly deadlines set by the ATO.
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Superannuation Guarantee Charge (SGC)
The Superannuation Guarantee (SG) dictates how much employers should contribute to their employees' super funds to ensure their future financial security. The SG rate has been gradually increasing over the years, reaching 10.5% in 2022, 11.5% in 2024, and is set to continue rising by 0.5% each year until it hits 12% by 2025.
The Superannuation Guarantee Charge (SGC) is a fine imposed on employers who fail to meet their SG obligations. The SGC is calculated based on the outstanding amount of SG payable, plus additional charges such as nominal interest and an administration fee. The due date for paying the SGC and submitting the SGC statement is one calendar month after the SG due date. Employers can use the ATO's SGC calculator to determine if they need to pay the SGC and how much they need to pay.
The SGC is not tax-deductible, and it is paid directly to the Australian Taxation Office (ATO). It is important for employers to keep track of payment deadlines and meet their superannuation obligations to avoid paying the SGC. By law, employers must make SG contributions at least four times a year for all their eligible employees, including full-time, part-time, and casual workers.
Employees are also encouraged to monitor their superannuation accounts to ensure they are being paid the correct SG rate. They can do this by logging into their superannuation account or using the AustralianSuper App if they are a member. Employees can also change their superannuation fund or consolidate accounts to cut costs and simplify their retirement savings.
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Superannuation Guarantee (SG) contributions
The Superannuation Guarantee (SG) is a compulsory employer contribution scheme that became a part of a wider reform package addressing Australia's retirement income dilemma in 1992. The SG dictates the minimum percentage of an employee's earnings that an employer needs to pay into their super fund. This contribution is meant to increase the financial security of Australians once they are no longer working, so that they don't have to rely solely on the Government Aged Pension as a source of income.
The SG rate has been gradually increasing over the years, reaching 10.5% in 2022 and is set to continue rising by 0.5% each year until it hits 12% by 2025. From 1 July 2024, employers are generally required to contribute 11.5% of their employees' ordinary time earnings into super funds. These contributions are taxed at up to 15% in the fund and count towards the employee's concessional contribution cap.
If an employer doesn't pay the required rate of SG into an employee's super account by the quarterly due date, they may have to pay a Superannuation Guarantee Charge (SGC) to the Australian Taxation Office (ATO). The SGC includes all the SG amounts owing to their employees, plus interest and an administration fee. Employees can use the ATO's Super Guarantee Eligibility Decision Tool to work out if their employer should be paying SG contributions for them.
It is important to note that employees can also make their own contributions to their superannuation funds, and they can choose the fund into which their employer's SG contributions are paid.
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Frequently asked questions
The Superannuation Guarantee (SG) dictates the minimum percentage of an employee's earnings that an employer is legally obliged to pay into their super fund. The SG can change over time, and the Australian Government controls and legislates it.
The current SG rate is 11.5% as of 1 July 2024. The rate will increase to 12% in July 2025.
If an employer doesn't pay the minimum SG for their eligible employees to the correct fund by the due date, the super guarantee charge (SGC) is applied. Employees can contact the Australian Taxation Office (ATO) for a step-by-step guide on how to recover missed or underpaid super.
