AREEA senior policy adviser Lisa Matthews reviews changes to employer superannuation contributions effective from 1 July 2013 and analyses the Coalition’s plans to amend the legislation in the near future.

The former Labor government passed legislative amendments that took effect on 1 July 2013, paving the way for staggered increases in employers’ compulsory super contributions. Under the legislative changes, the increases to employer contributions were proposed to look like this:

• 1 July 2013 9.25%
• 1 July 2014 9.5%
• 1 July 2015 10%
• 1 July 2016 10.5%
• 1 July 2017 11%
• 1 July 2018 11.5%
• 1 July 2019 12%

The Coalition last year announced its policy would be to defer by two years any future increases, with employers’ compulsory super contributions to look like this under a Coalition government:

• 1 July 2013 9.25%
• 1 July 2014 Still 9.25%
• 1 July 2015 Still 9.25%
• 1 July 2016 9.5%
• 1 July 2017 10%
• 1 July 2018 10.5%
• 1 July 2019 11%
• 1 July 2020 11.5%
• 1 July 2021 12%.

The main difference would be that under Labor’s amendments, compulsory contributions would increase to 12% by 2019 whereas under the Coalition they would reach 12% by 2021.

However, given that Labor’s increases have already passed into law, the Coalition needs to get legislation through the parliament in order to defer any future increases, the next of which is due to come into effect on 1 July 2014.

To do this, the government has tabled the Minerals Resource Rent Tax Repeal and Other Measures Bill 2013 to, among other things, defer future super increases for two years.

That legislation has passed through the Lower House but has yet to pass through the Upper House, with parliament resuming on 11 February 2014. The legislation needs to pass before 1 July 2014 in order to defer the next increase.

Interestingly, while some parts of the MRRT Repeal Bill propose to have retrospective effect, the super amendments do not. This means there is no provision in the bill for the 1 July 2014 super increases to be deferred unless the legislation passes and receives Royal Assent before that date.

It may prove difficult to pass the legislation before 1 July this year given the current make-up of the Senate, in which case the next super increase will take effect, bringing employers’ contributions to 9.5% on 1 July 2014. Future increases would then presumably be deferred once the legislation passes.

AREEA understands this is complicated by the fact that some businesses have included the already legislated increases in their EBAs. These increases will have to be paid even if the new government manages to defer upcoming increases via legislation.

Please contact your local AREEA office if you require further advice on these matters.