Workers are a step closer to more dependable superannuation payments with the release of the Securing Australians' Superannuation consultation paper.
As part of the 2023-24 Budget, the Albanese Government announced that from 1 July 2026, super must be paid on payday, a change that will benefit the retirement incomes of millions of Australians.
This simple change will strengthen Australia's superannuation system and help deliver a more dignified retirement to more Australian workers.
The reform will address the issue of unpaid superannuation by giving employees better visibility of their retirement savings.
While most employers do the right thing, the Australian Taxation Office (ATO) estimates that employees were owed $3.4 billion worth of super in 2019-20. The reform will improve the ATO's ability to detect and recover unpaid super payments.
The consultation paper invites industry and stakeholder input on the framework to pay super at the same time as salary and wages.
It also seeks feedback on how employee onboarding and their choice of fund could be improved under payday super. Consultation closes on 3 November 2023.
Payday super will strengthen Australia's superannuation system and builds upon the Government's efforts to legislate an objective of superannuation: to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way.
Around 8.9 million Australians will benefit from higher retirement savings from receiving their Superannuation Guarantee contributions earlier and more frequently throughout their working life.
By switching to payday super, a 25-year-old median income earner currently receiving their super quarterly and wages fortnightly could be around $6,000 or 1.5 per cent better off at retirement.
More frequent super payments will also make employers' payroll management smoother with fewer liabilities building up on their books.
The ATO will continue consultation with industry through this year and next year on the administrative design, and Treasury consultation on the legislative design is planned for 2024. Subject to the passage of legislation, the Securing Australians' Superannuation package will commence from 1 July 2026, which will give employers more than enough time to prepare for the change.
