18 September 2024
The Australian Government’s pivotal payday super announcements today are another major step forward to modernise the super system, making it fairer for both employers and employees.
The Super Members Council welcomes the announcements and the Government’s strong commitment to reforms to help fix underpayments that cost 2.8 million Australian workers $5 billion in a year.
The reform, long championed by the profit-to-member super fund sector, will see super paid in sync with wages by 2026, instead of at least once a quarter. This crucial reform will modernise the super payment system and dramatically help to curb unpaid super.
Payday super will lead to almost 9 million Australians receiving their super contribution more frequently throughout their working life. SMC analysis shows the average worker would be $7,700 better off in retirement with payday super because the returns accrue and compound sooner.
Today’s announcement of key features of the proposed payday super design model will give businesses and super funds time to prepare for a smooth transition to payday super.
Super Members Council CEO Misha Schubert thanked the Australian Government – especially Treasurer Jim Chalmers and Assistant Treasurer Stephen Jones - for a strong commitment to payday super reform to ensure Australians get the full benefits of our transformative retirement system.
“Paying super on payday will modernise the super system and should hugely reduce underpayments. It’s an excellent example of reform to benefit everyday Australians with super, and will strengthen fairness for both workers and employers,” Ms Schubert said.
The new penalty regime will encourage employers to rectify underpayments quickly, with those deliberately or repeatedly underpaying facing more severe penalties.
Shifting to payday super will level the playing field for all businesses – so employers who pay their workers super correctly are not undercut by those who have not.
It also creates smoother cashflow management for business. Quarterly super payment allows large super liabilities to accrue and creates an administrative burden from time-consuming reconciliations, which can be prone to errors leading to incorrect payments.
“Passing payday super into law this Parliamentary term is crucial to ensure millions of Australians who are currently being short-changed are paid their super on time and in full.”
“Unpaid super locks too many Australians out of the full transformative benefits of the retirement system and leaves people poorer when they retire. A unified push is needed to stamp it out.”
“We congratulate the Government on taking this important step towards legislating payday super. We stand ready to work with the Government, Parliament and other key stakeholders to enact these pivotal reforms and ensure Australia fixes the stubbornly persistent unpaid super problem.”
New SMC analysis released in a report on unpaid super this month found:
- In one year, 2.8 million Australians missed out on $5.1 billion in legal super entitlements (2021-22)
- Over 9 years, Australians have missed out on $41.6 billion in unpaid super
- The average affected worker missed out on $1,800 in super in a year – which could mean more than $30,000 less in retirement savings for a typical worker
Contact details:
James Dowling: 0429 437 851, jdowling@smcaustralia.com