Most Aussies will get a pay raise next month… will you?

Will you get a pay rise or a pay cut next month?
The post Most Aussies will get a pay raise next month… will you? appeared first on The Motley Fool Australia. –

You might not realise it, but most Australians are in line to get a pay rise next month. Under laws that passed the Australian parliament a few years ago, the superannuation guarantee is scheduled to rise from 9.5% to 10% from 1 July. That means that anyone who received superannuation payments from their employers (which is almost everyone who is currently employed) will get a pay rise of 0.5% in just a couple of weeks.

Yes, it is super. But before anyone brings up how you won’t see this money in your bank account, remember that super is your money too. And a rise in the superannuation guarantee will result in anyone receiving it becoming more wealthy. As well as better placed for a comfortable retirement.

Any money that flows to superannuation is typically invested on your behalf as well. So this extra cash that most workers will be receiving will head straight into assets like bonds, term deposits, and yes, ASX shares, to grow over time.

Suped-up super

Of course, many Aussies might prefer to just pocket the extra cash themselves. But remember, money that goes to super is usually taxed less than ordinary income. So it’s a win from that perspective as well.

However, not all Aussie workers night be enjoying this upcoming rise. According to a report from the ABC this week, there are a number of workers who might not feel the benefit. The report cites a ‘loophole’ in the laws that allow businesses that pay super as part of a total salary package to simply rebalance their employees pay to reflect the higher super guarantee. In other words, they can take the extra 0.5% they have to pay in super out of their employees’ pay packets.

This isn’t technically a ‘pay cut’ since the employee in question is no worse off on paper. But it will certainly upset many of these employees that might not appreciate a reduction in their take-home pay. The ABC included the results of a survey conducted by research firm Mercer. This found that almost two-thirds of firms with a ‘total salary package’ structure for their workers were considering taking the super increase out of their employees’ existing pay packets.

The report also states that the federal government sees no problem with this situation. It points out that Superannuation Minister Jane Hume recently cited a trade-off between providing more superannuation and wage increases. This is something that The Motley Fool’s chief investment officer Scott Philips recently discussed. So if you’re not sure if you’re on a ‘total salary package’, it might be a good time to find out!

The post Most Aussies will get a pay raise next month… will you? appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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