KEEPING UP TO DATE

Plan for Super increases

Running a SME during a pandemic has meant keeping a careful eye on cashflow. As a result, little changes can have a big impact if we don’t plan ahead.

One such change is the annual increase in Superannuation Guarantee Contributions over the next four years. Employer contributions started moving from 9.5% in 2020 and will increase gradually to 12% in 2025. This year on 1 July 2022, employer contributions move to 10.5%.

Tips to manage the change effectively:

• Check your employment agreements. You may need to increase your superannuation contributions, or you may be able to absorb the superannuation increase by decreasing the base salary. Get support if you are unsure what you are legally allowed to do.
• If you are considering absorbing the increase in the base salary, take a moment to pause and consider whether people may then look at alternative employment options. It can be hard to find great team members and it takes time to train them. Make sure you’re thinking long term on the decisions.
• The great resignation is also seeing people move for higher salaries/wages in many industries. Be sure to consider the total employment costs now and going forward over the next couple of years.
• Past budgets, pricing and margins may need to be carefully reviewed and options developed to address any changes. Your clients are in the same boat and need time to plan for other increases too.
• Communicate, communicate, communicate! Regardless of how you move forward, make sure the message is clear. Take time to explain what’s happening and what it means for the team as this can make a big difference to the way your team responds.

If you’re not sure where to start or have concerns about implementation, call us to discuss your options. We’re here to help!