This Calculator Shows How Your Super Payout Will Be Reduced Under New Laws

The repeal of the mining tax has brought with it changes to how superannuation will be increased over the next seven years. How will that affect your super?

Piggy bank picture from Shutterstock

The ABC has put together a calculator that compares the way super was meant to increase to what's now going to happen under the legislation, which stops an increase that was due to kick in from July next year.

It's a relatively blunt tool that requires only your age and your expected income to come up with a figure based on Industry Super Australia modelling of the new laws and an assumed wage growth of 3 per cent per annum. As you might expect, with super effectively frozen to pay for the mining tax cut, the results are negative for overall superannuation growth.

There are some assumptions within the modelling, such as no 18-year-olds earning more than $40,000 per annum, but it's still interesting stuff for those concerned about the changes.

Calculator: How the superannuation delays affect you [ABC]


    The Blog could also be titled "How your take home pay will be increased under new laws"

      Not it couldn't. Super is obligatory and has to be contributed at the specified levels. Offering a pay rise because you don't have to contribute as much to super isn't compulsory.

        Depends if you are offered a "package" that includes wages and super. Although you won't be taking home more, but you'll be staying even for a bit longer.

        Agreed. I think what poppapete means is the comparative increase to take home pay compared to take home pay under a situation where superannuation contributions are increased.

        Salary + Super = cost of employment (very rough, certain taxes etc come into it) to the employer.

        If we increase the amount of super, that increases the cost of employment and puts negative pressure on future salary increases. The freezing of super essentially freezing that element of the cost of employment. Wherever aggregate wage prices head in the future, they will be found in the salary aspect. With compulsory increases to super, that increase would represent part of those future total wage increases.

        If X = total salary today and X +1 equals total salary in 10 years;

        Under the current 9% system, Salary = 0.91X + 0.91, Super equals 0.09X + 0.09

        Under a system where super was increased to 10%, Salary = 0.9X + 0.9, Super equals 0.1X + 0.1.

        It's not necessarily a perfect transfer though. People tend to forget about Super and concentrate only on their salary when considering remuneration so certain factors may see a divergence in future total salary under the two systems. That's a very complex question however it is important to remember that Super as a policy tool is enforced savings. It's not a method of increasing total remuneration.

        Last edited 04/09/14 9:26 am

        “Although employers are required to make superannuation guarantee contributions, employees bear the cost of these contributions through lower wage growth,”
        Ken Henry’s tax review.


        But employers think of pay as total remuneration package (ie. wages+super+benefits) . Sure, many hide this from their employees, but every time the government forces employers to increase their employees remuneration (like the 0.5% increase as of 1/7/2014), that money has to come from somewhere.

        I'll give you a hint... It doesn't come from the government, and it doesn't come from the employer (for long).

      Yes, employers are always quick to hand over the extra money in wage increases. The same way companies always lower prices when tariffs and taxes get reduced. Time and time again these claims are made, oh if we remove this tax, if we sign this trade agreement, costs will go down. When in fact they know what people are willing to pay, what people are willing to be paid and so they just pocket the benefit themselves.

      It's unlikely most people would get that money in their pockets.

    Yes, my super will be worse off.
    But i won't be.
    My pay is usually scaled to inflation. If inflation is @ 3% I would usually get a 3% pay raise each year.
    If my employer is forced to increase their contribution to my super what is going to happen then?
    My pay increase will go down. So then inflation will have gone up by 3% by my in pocket pay will have gone up by a number <3%.

      What do you mean "usually"? It either is or it isn't. If it isn't, and that is voluntary from your employer, then your argument doesn't hold as your pay rises will take a hit based on company performance as much as super legislation.

    *As long as your Super was already paid at the 9% base rate. If your employer pays above the base then you're probably not affected (as much, if at all).

    This is a good thing I think. The old increases were quite steep year on year for an employer.

    ps. I'm just a humble employee who will be 45k worse off.

    The latest government changes are not about "how your super payout will be reduced", but how they will not be increased - a significant difference.

    What superannuation requirements actually do is to force us to put away money for our retirement, they don't actually give us any extra money. So anyone concerned about this is free to salary-sacrifice money to super and the end result will be the same - it just won't be compulsory.

      Agreed. Unless I missed something,.. super isn't being reduced... it's just not increasing like they hoped.

      -1 for misleading headline.

        The end result is that your compulsory super total will be reduced from what had previously been legislated for. So the headline stands.

    Thanks Tony.. 2 years, 4 months, 10 days left...

    Changing super rates has no impact on the total value of remuneration. It changes what you receive in the hand only. It does not put your total income up or down.
    If people are worried about the amount of super they have, guess what, you take responsibility for yourself and choose to contribute more. You can contribute your entire salary if you see fit.

      Depends on what sector and type of pay. Im on a salary package, so if the super % goes up, take home pay goes down.

      However, people with hourly rates I know have had just the super % go up with no change to take home pay.

      Sadly, since it is those with hourly rates who usually earn less, they will be the ones who need the extra super. They will be wose off overall.

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