superannuation changes

SuperannuationWhat will you do?The changes explained and how to make a plan for 1 July 2013

www.kineticrecruitment.com.au

Superannuation is big business.

Superannuation is big business. A trillion dollar a year business.

Superannuation is big business. A trillion dollar a year business.

$1,000,000,000,000

That’s

Superannuation is big business. A trillion dollar a year business.

$1,000,000,000,000

That’s

And it’s changing

It’s going

9% 12%

6yrs

UP

It’s extending

No Limit

LONGER

70yrs

It’s getting SIMPLER

It’s getting SIMPLER

MySuperNew Super product replacing default

products

It’s getting SIMPLER

MySuperNew Super product replacing default

products

Data StandardSend contributions in 1 standard electronic

format

So, what do you need to do to prepare?

?

Change #1

Super is going UP

9% 12%

6yrs

Now 13/14 14/15 15/16 16/17 17/18 18/19 19/20

9.00% 9.25%9.50%

10.00%

10.50%

11.00%

11.50%

12.00%

0.25% increaseEach year

0.50% increaseEach year

On 1 July each year Super contributions will increase till they reach 12%

but who is paying for these increases?

but who is paying for these increases?

You?

but who is paying for these increases?

You?

You?

but who is paying for these increases?

You?

You?Well, that depends on 2 things:

but who is paying for these increases?

Well, that depends on 2 things:

01Remuneration

Structure

You?

but who is paying for these increases?

Well, that depends on 2 things:

01Remuneration

Structure

02What do you want to do?

There are 2 types of remuneration structures:

01Remuneration

Structure

# 1Base plus

Superannuation($60K + super)

# 2Salary Package

($65.4k incl. super)

If you use base + super you must increase remuneration

01Remuneration

Structure

# 1Base plus

Superannuation($60K + super)

# 2Salary Package

($65.4k incl. super)

Company must increase remuneration

If you use salary package, you may not need to.

01Remuneration

Structure

# 1Base plus

Superannuation($60K + super)

# 2Salary Package

($65.4k incl. super)

Company must increase remuneration

Company may not be required to increase

If you use salary package you must review:

# 2Salary Package

($65.4k incl. super)

Company may not be required to increase

Employment contract

Modern Award

What does your contract say about

super contributions?

What are your Modern Award obligations?

02What do you want to do?

If you are not required to increase the remuneration

package – your employees will cover the increase from their

take home pay.

02What do you want to do?

If you are not required to increase the remuneration

package – your employees will cover the increase from their

take home pay.

! Super is REAL money.Do not feel obliged to increase remuneration packages if you do not have to.

Don’t forget about bonus, commission and other payments to which the superannuation guarantee applies.

Amount: $2,000

To make your plan, identify:

What do you have to do?

What do you want to do?

Why do you want to?

What impact will that have on the business?

(to meet your legal obligations)

(increase remuneration even if you don’t have to?)

(is it to be nice or an active engagement strategy?)

(consider implications now and in the future on, salary costs, employee engagement and return on investment for example)

Change #2

Super is extending LONGER

No Limit

70yrs

Currently, super guarantee contributions have an upper age limit of 70 years.

Current

Over 70

Upper Age limit will be removed

Super contributions required for all employees

Current

Over 70

From 1 July 13

Over 70

Change #3

Super is getting SIMPLER

MySuperNew Super product replacing default

products

Data StandardSend contributions in 1 standard electronic

format

MySuper

From 1 January 2014 all ‘default super’ funds must offer a MySuper product.

It is expected that existing default funds will offer a MySuper product.

You default fund should contact you with transition details.

MySuper

From 1 January 2014 all ‘default super’ funds must offer a MySuper product.

It is expected that existing default funds will offer a MySuper product.

Your default fund should contact you with transition details.

If they don’t contact you by October 2013

– contact them and ask

Do you offer a MySuper product?

Data Standard - SuperStreamFrom 1 July 2014 you must use the new data and e-commerce standard (1 July 2015 for employers with < 19 employees).

For more information about the data standards:

Now you have a better understanding of the changes

What will you do about it??

1 JULY 13 - TO DO CHECKLIST

Identify any employees > 70 years Review Remuneration Structure (all employees) Review Employment Contract Review Modern Award Obligations Identify what you have to do Decide what you want to do Document what you will do Notify your employees Issue employment condition variation letters (where required)

TIMETABLE OF CHANGES

1 Jul 13 Increase SG rate from 9% to 9.25%Make SG contributions to employees > 70

1 Jan 13 Default fund must offer a MySuper product1 Jul 14 Increase SG rate from 9.25% to 9.50%

Use new data and e-commerce standard (employers > 20 employees)1 Jul 15 Increase SG rate from 9.50% to 10%

Use new data and e-commerce standard (employers < 19 employees)1 Jul 16 Increase SG rate from 10% to 10.5%1 Jul 17 Increase SG rate from 10.5% to 11%1 Jul 18 Increase SG rate from 11% to 11.5%1 Jul 19 Increase SG rate from 11.5% to 12%

FURTHER INFORMATION

ATO Employers Superannuation

DHS Small Business Superannuation Clearing House

This presentation has been provided as general summary of the changes occurring to Superannuation.

You should seek professional advice when designing a system to address the changes to superannuation.

ATO Super Eligibility Tool

Kinetic Recruitment specialises in permanent and contract recruitment to Defence, Rail and Resources organisations in Australia.

Amelia De Angelis is the Operations Manager for Kinetic Recruitment and manages the Human Resources department . She holds a Bachelor of Business Studies and is passionate about sharing knowledge with our clients.

For further information please contact us at enquiries@kineticrecruitment.com.au

www.kineticrecruitment.com.au