New reforms that require employers to pay super on payday will benefit younger Australians who are opting to use SMSFs for their retirement planning, according to the SMSF Association.
SMSF Association chief executive Peter Burgess welcomed the federal government’s reforms, stating they would improve compliance in the superannuation system and result in a better outcome for individuals establishing SMSFs.
“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,” Burgess said.
“It will help strengthen the superannuation system by ensuring greater SG compliance and ultimately will result in individuals enjoying higher balances in retirement.”
According to Burgess, the measure will simplify the process of managing superannuation contributions for employees and enable them to plan more effectively for the future.
“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,” he said.
“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.”
Treasurer Jim Chalmers and Assistant Treasurer Stephen Jones yesterday announced the implementation of reforms that would require employers to make superannuation contributions on payday and acknowledged the change would have a significant impact on the retirement accounts of young Australians.
“This simple change will strengthen Australia’s superannuation system and help deliver a more dignified retirement to more Australian workers,” they said.
“By switching to payday super, a 25-year-old median income earner currently receiving their super quarterly and wages fortnightly could be around $6000 or 1.5 per cent better off at retirement.”