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SMSF industry bodies welcome new payday super rules

By Keeli Cambourne
May 04 2023
3 minute read
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The new payday super rules will be very beneficial for the SMSF sector, said the SMSF Association.

The SMSF Association has welcomed the decision and said it would particularly benefit the increasing number of younger Australians opting to use a self-managed super fund (SMSF) as their retirement savings vehicle.

“About 40 per cent of new SMSFs are now being established by individuals under the age of 45 who have many years of superannuation guarantee (SG) contributions ahead of them. So, this reform that requires employers from 1 July 2026 to pay their employees’ superannuation at the same time as their salary and wages is welcome news,” said Peter Burgess, chief executive of the association.


“It will help strengthen the superannuation system by ensuring greater SG compliance and ultimately will result in individuals enjoying higher balances in retirement.

“In addition to benefiting those in lower paid, casual, and insecure work who are more likely to miss out when super is paid less frequently, it will also provide added certainty in terms of the timing of contributions, which, from an advice and contribution planning perspective, can be critically important and may help to reduce instances of inadvertent cap breaches.

“It will also provide greater levels of transparency, and hopefully engagement as employees will find it easier to track their SG contributions by linking it to their wage payments.”

The Albanese government said it would be implemented from 1 July 2026, giving employers, payroll providers, super funds, and other stakeholders sufficient time to prepare. 

“This simple change will strengthen Australia’s superannuation system and help deliver a more dignified retirement to more Australian workers,” said Treasurer Jim Chalmers in a joint statement with Minister for Financial Services Stephen Jones. 

“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 make employers’ payroll management smoother with fewer liabilities building up on their books.”

The Association of Superannuation Funds of Australia (ASFA) said the government’s announcement that it will mandate the payment of superannuation with wages would mean thousands of dollars more in retirement for millions of Australians.

“Requiring employers to pay SG at the same time as wages will make it easier for employees to monitor the SG compliance of their employer and for the ATO to compare superannuation payments with wage payments,” ASFA deputy CEO Glen McCrea said.

“It will limit build-up of SG liabilities and hold employers to account.”

ASFA said the announcement of additional resources in next week’s federal budget for the ATO to help detect unpaid super and meet new targets for recovery is a necessary step in combating the scourge of unpaid super.

The ATO has previously estimated a net SG gap of $3.4 billion. This is the shortfall in SG payments by employers and represents 4.9 per cent of the total expected SG contributions for the year 2019–20.

“Given the significance of the problem, a multifaceted approach is needed. A sharper focus on recovery of unpaid SG by the ATO is one of the most effective means of driving down the SG gap for the benefit of employees,” Mr McCrea said.

Industry Super Australia CEO Bernie Dean said moving super payments to align with wages could give millions of Australians $50,000 more at retirement and drastically curb Australia’s unpaid super scourge, which cost workers $33 billion over seven years.

“The government has listened to a broad coalition of stakeholders — including unions, employer groups and consumer bodies to mandate that employers’ super payments to employees are made on payday,” he said.

“Unpaid super can cost some women as much as 10 per cent from their final nest egg — a crushing financial blow when women already retire with about a quarter less super than men.

“And all the 4.2 million Australians who are paid super quarterly will get thousands more at retirement due to more frequent payments earning compound interest for longer.”

The Australian Institute of Superannuation Trustees (AIST) also added that digital technology could assist in implementing the reform and counter any arguments that payday super would “burden” employers.

“Historically, there has been an argument that paying more frequently than quarterly would be a burden on employers,” said AIST CEO Eva Scheerlinck.

“However, since the introduction of digital initiatives such as SuperStream and single-touch-payroll, paying super is part of an automated process, requiring no additional manual effort.

“It will also give employees and the ATO earlier visibility of under-payment or non-payment of super, meaning it can be followed up more quickly with the employer and not left to balloon into serious non-payment.”

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