April 22 2022
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Employer News

Removal of the $450 super threshold

Smiling woman folding clothing items in a clothing store Smiling woman folding clothing items in a clothing store

In the 2021 Federal Budget, the Australian Government announced its intention to remove the $450 monthly income threshold for Superannuation Guarantee (or SG) contributions.

The threshold meant workers were only entitled to SG contributions if they were over the age of 18 and earned $450 or more from an employer (before tax) per calendar month. Workers under 18 years of age were only entitled to SG contributions if they worked more than 30 hours in a week and earned $450 or more (before tax) per calendar month.

Treasury’s 2020 Retirement Income Review Final Report notes that around 300,000 people, or 3 per cent of the workforce were affected by this exception from SG contributions. They were mainly young, lower income and part-time workers, and almost two-thirds of them were women1.

The removal of the threshold has now been legislated and will come into effect on 1 July 2022.

What will change?

From 1 July 2022, all eligible workers aged 18 years or older will be entitled to receive SG contributions regardless of how much they earn.

The rules for workers under the age of 18 will remain generally the same. They will still only be eligible for SG contributions if they work more than 30 hours per week. 

How Rest can help

We have tools and resources to help you with this change come 1 July 2022.

Manage your SG contributions

Find out how you can manage contributions online through the EmployerAccess platform on Rest’s website.

Simplify super onboarding

We’re here to help you onboard your employees regarding their super – visit our onboarding page for your digital onboarding toolkit.

Educate your employees

Come 1 July, your employees who are eligible to receive super for the first time may have questions they need answered. We have digital education and advice tools to help them with their super.

You can also help them understand the basics and share our Super simple guide with them.

Download the guide

Monitor

Tune into our latest webinar

Watch our recent webinar for a discussion on how employers can prepare for the removal of the $450 super guarantee threshold


Watch now

Frequently Asked Questions

We have set out below some of the frequently asked questions* received during our recent webinar: Removal of the 450 super threshold. 

How will Stapling affect the onboarding process for employees who become eligible for superannuation guarantee (SG) contributions?


As stapling only affects employees who commenced with the employer on or after 1 November 2021, the process will be different for employees based on their employment commencement date.

Let’s consider a scenario where an employee commenced work with an employer before stapling came into effect – that’s before 1 November 2021. If the employee hasn’t returned a completed Choice of Fund form, AND has never received super from that employer, the employer should pay superannuation guarantee (SG) contributions on behalf of this employee to the employer’s nominated default fund.

Now let’s assume an employee commenced work after stapling came into effect – that’s on or after 1 November 2021. In this scenario, if the employee hasn’t returned a completed Choice of Fund form, AND has never received super from that employer, the employer should complete a stapled fund search and pay to that fund. If the ATO has confirmed that there is no stapled fund for the employee, then the employer can pay the SG contributions to the employer’s nominated default fund.

How will removal of the $450 threshold for SG payments affect employees under the age of 18?


The rules for workers under the age of 18 will remain generally the same after the removal of the $450 super threshold. They will still only be eligible for SG contributions if they work more than 30 hours per week. 

How will the removal of the $450 threshold impact people working in multiple part-time or casual jobs?


Let’s use Tina as a hypothetical Rest member example. Tina is in her fifties and spends most of her time caring for her elderly mother but is also a part-time cleaner at the local bowling club working three-to-four shifts a month, and picks up casual shifts at a grocer and a clothing store on weekends.

In one month, Tina earned $420 at the bowling club, $400 at the grocery store, and $350 at the clothing store. Even though her combined salary before tax for the month was more than $1,000, each individual job paid less than $450. Under the monthly income threshold for SG contributions, this means none of her employers would be obligated to make a payment into her superannuation account.

Once the monthly income threshold is removed on 1 July 2022, all of Tina’s employers will be required to make SG contributions to Tina’s Rest account regardless of her monthly income. This will really improve Tina’s retirement outcome.

What payment options are there for making superannuation guarantee (SG) contributions?


There are a number of online payment options worth considering, but for the purpose of this answer we will cover three of them.

The first is a clearing house, which allows you to make one bulk payment that distributes super to your employees' nominated funds on your behalf. Rest employers have access to a fee-free clearing house service, or you can consider other clearing house providers. 

The second payment option may be applicable if all of your employees are with your default super fund and this default fund can process SG contributions via its online portal. At Rest, employers can use the online portal - EmployerAccess.

And finally, as a third option, your payroll provider may be able to arrange payment of super for your employees. We recommend contacting your payroll provider for more information because fees and charges might apply. 

What about the risk of fees eroding modest super balances?


Protecting the super balances of hard-working Australians on modest incomes has always been at the core of what we do here at Rest. Most of our members are women, and with a strong retail focus, many of our members work on a casual or part-time basis. These are just the sort of workers who may become eligible for superannuation guarantee (SG) contributions once the threshold is removed.

So we know how important low fees are for workers with modest super balances. According to SuperRatings Superannuation Market Analysis and Research Tool, which compares Rest’s Core Strategy investment option against the default investment option of all publicly available superannuation products tracked by SuperRatings, as at 31 January 2022, fees for Rest’s Core Strategy investment option are at least 25% lower than the super industry average^. And as a profit-to-member super fund, our profits don’t go to shareholders, they go to our members.

More broadly on the issue of fees, it’s worth noting the Government introduced rules in 2019 to protect young members and those with low balances from their super accounts being eroded by fees for insurance cover. Insurance cover is no longer automatic for new members if they are under the age of 25 or have an account balance of less than $6000 dollars, and certain fees are capped at 3% p.a. for accounts under that balance.

^ SuperRatings, Superannuation Market Analysis and Research Tool (SMART), 31 January 2022. Rest's Core Strategy is compared against the default investment option of all publicly available superannuation products tracked by SuperRatings. Fees are subject to change. Taxes, other fees and costs may apply. SuperRatings does not issue, sell, guarantee or underwrite this product. Go to www.superratings.com.au for ratings criteria. Ratings, awards or investment returns are only one factor that you should consider when deciding how to invest your super. Past performance is not an indicator of future performance. 

* These FAQ responses are general information only and is not, and should not be regarded as, legal advice or personal financial advice. Rest accepts no responsibility and, to the maximum extent permitted by law, disclaims any and all liabilities in respect of any loss or damage arising directly or indirectly from any use and/or reliance on the information contained in these FAQ responses.


Additional information

Visit this ATO page for more information on the removal of the $450 threshold.

For more information on eligibility criteria for SG contributions, visit this ATO page.

For a refresher on the introduction of stapling on 1 November 2021, click here.

If you have any additional questions, feel free to contact us.

1 For more information on Treasury’s Retirement Income Review Final Report, please visit this page.