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Highlights
- The rise in superannuation payments has come amidst rising inflation and tight labour market conditions.
- Some employers may force their workers to pay for their own super rises, resulting in a loss of their take-home pay.
- Households can choose some unique solutions to fight the inflationary wave and manage pay cuts.
As inflationary concerns continue to weigh heavily on households, many are left struggling to find a solution. Some changes have been introduced to the superannuation system, making circumstances tougher for those dependent on these payments. These superannuation changes will come into effect from July 1.
Among these changes, the most troubling one seems to be a reduction in the take-home pay of some Australian workers. These expectations have come as the superannuation guarantee is increasing from 10% to 10.5% on July 1.
For workers whose superannuation contributions are a part of their whole salary package, the take-home pay might be reduced to cover the increase in super contributions. Employers are expected to take this move to balance out the drastic changes announced in the superannuation system.
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Superannuation Minister Jane Hume has delivered a similar warning stating that some bosses might force their workers to cover the cost of their super increases on July 1. However, not all workers need to be worried, as those who receive a certain amount plus super would not see any changes to their take-home pay.
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Trade-off between wages and super rise
While the super rise guarantees a better outlook for working individuals in the future, it also comes at a cost. As employers are already battling rising production costs and increased commodity prices, a lot cannot be expected from them.
Meanwhile, unions have been demanding pay hikes as well as rises to the superannuation payments, both of which do not appear realistic. Minister Hume has revealed that some businesses can legally force employers to absorb the cost of rising super under specific contracts. Thus, workers with this clause in their employment agreement could be forced to live with lower take-home income.
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In light of this trade-off, many have criticised the Labor government for conducting a superannuation hike alongside a bump in wages. After much deliberation on freezing the upcoming increase, the government allowed the already legislated super increase to proceed as planned. The superannuation guarantee is anticipated to increase by 0.5% each year until it reaches 12% by 2025.
What can households do?
It is no surprise that situations are going to be tight for most households in the next few months. Interest rate hikes are likely to add to the repayment burden faced by mortgage-holding households.
In the given scenario, many households could be looking for unique and innovative ways to save up even a single penny. Here are some helpful and unusual ways that individuals can use to ease the burden of daily costs:
- Rent rooms on Airbnb: Those with an additional room can put it up to some good use, especially as travel and tourism have taken off over the recent months. For instance, individuals can use Airbnb to put up their own house as an accommodation for those travelling the area. For travellers, it is a cheaper and more homely option than staying in hotels. In fact, the ongoing trend of taking work vacations could encourage many individuals to stay in serene locations for weeks. A cheaper and home-like stay could be perfect for these individuals.
- Sell unused clothes: Apart from being an environmentally friendly solution, thrifting is a great way to make some easy money. Individuals can choose outfits from their own wardrobe that they no longer feel the need to keep and sell at a reasonable price on social media platforms. A key to gaining followers on these platforms is using the right hashtags.
- Taking tax refund in every pay: Most individuals wait until the end of the year to get their tax refund. This means that a potential interest on this rebate money is lost as it is kept with the taxation office throughout the year. Individuals can fill out a withholding variation form on the ATO website to take advantage of deductions regularly instead of a lump sum at the end of the fiscal year.
