Some employees are being asked to fund the super rise – are you among them?

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June 23 2021
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The upcoming superannuation rate increase is set to cost some employees a chunk of their take-home pay, with ASX-listed companies confirming they’ve informed their employees that their base pay is about to dip.

Some employees are being asked to fund the super rise

Leaked emails to staff show that a raft of ASX 200 companies, including AGL and Telstra, have already informed their employees they’re set to lose a portion of their take-home pay due to the upcoming changes.

Telstra confirmed to nestegg that certain employees have been told that their super increase will be funded out of their base pay, as per their employment contracts. But, according to Telstra, this only accounts for about 5 per cent of the telco’s workforce.

“The promise of a minimum of 10 per cent superannuation has been included in our enterprise agreements since 2015. The EA applies to all employees in Australia who aren’t in senior management roles,” a Telstra spokesperson said.

“For our senior managers and executives not covered by the EA, their super contribution of 9.5 per cent will increase to 10 per cent from 1 July in line with the new legislation.”

“This group represents around 5 per cent of our overall workforce and their overall fixed remuneration will remain unchanged.”

Similarly, AGL also confirmed employees could see a reduction in take-home pay.

“For AGL employees who have a Total Fixed Remuneration contract, the increase to the superannuation guarantee contribution will result in a redistribution between base salary and superannuation components,” a spokesperson for AGL said.

While AGL and Telstra have come forward with the changes, media reports suggest listed companies, including ANZ and Macquarie Group, are among those that will also require employees to accept a pay reduction.

Is it legal?

The changing superannuation contribution rate can legally cost you a portion of your take-home pay, pending your employment type.

From 1 July 2021 the government will lift the superannuation guarantee by 0.5 per cent a year, before it reaches 12 per cent in 2025.

With superannuation set to edge up from 9.5 to 10 per cent, employees with employment contracts that state their super is included as part of their total package are set for a slight reduction in take-home pay as they’re effectively responsible for funding their own retirement.

There is of course one exception to the rule – employers cannot dip into an employee’s base pay if that means their salary will drop below the minimum permitted wage as stipulated in their award or employment contract.

According to HLB Mann Judd's director of superannuation Andrew Yee, employees are being advised to check their contracts to ensure they’re prepared for 1 July.

“Employees need to adjust their personal and family budgets to factor in a reduction in their net pay as this will have a knock on effect on their day to day spending and recurring expenses such as rent, loan repayments and school fees," he said.

"Employees can check with their employers as to whether their PAYG tax withholding on their salary can be reduced so that their take home pay after 1 July is not too dissimilar to what it is currently. Also, with many employees receiving annual pay increases in July, they should be reviewing their current salary packaging arrangements with their employer with a view to mitigating any reduction in take home pay.”

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