The commencement of Payday Super is expected to boost average fund balances and help end the underpayment of compulsory contributions to millions of employees, two superannuation bodies have stated.
The Association of Superannuation Funds of Australia (ASFA) said the start of the new super guarantee (SG) payment system from today would lift the balance of an average young worker by around $5200 by the time of retirement, while the Super Members Council (SMC) noted the increase for an average worker would be more than $9000.
These increases would be driven by more frequent payments of SG contributions, as well as ensuring employers make them in a timely manner.
ASFA chief policy officer James Koval noted: “For too long, super could sit in an employer’s account for months before it reached workers, earning nothing for their retirement in the meantime.
“From today, it arrives at the right time and in the right place: in your super account, as you earn it, where it can start earning returns straightaway. The sooner super is invested, the longer it earns returns,” he said, noting a shift from quarterly to fortnightly payments for a 25-year-old on the average wage created the increase mentioned above.
“The reform also makes unpaid super easier to catch. Under the quarterly system, workers often notice missing super four to six months after earning it. By then, the business may have gone into liquidation, meaning the worker’s super money cannot be recovered.
“Young people and tradies are the most likely to miss out under the current system and they’re the ones this change protects most.”
SMC chief executive Misha Schubert said its analysis of ATO data indicated unpaid super exceeded $6.3 billion a year, highlighting the need for the Payday Super regime.
The council found 28 per cent of workers were underpaid an average of $1850 in the 2024 financial year and unpaid superannuation disproportionately hurt women, who usually retire with around 25 per cent less super than men, while younger workers and low-income earners are also at risk, with around half of the members of these two groups who earn less than $25,000 a year having unpaid super entitlements.
Both ASFA and SMC noted around 40 per cent of employers already pay super more frequently than quarterly via the use of digital payroll and single-touch payroll reporting systems, but this figure had started to climb since the new payment timeframe was first announced.
“For employers making this transition, we appreciate the scale of the task and that’s why we support the ATO’s graduated approach on enforcement in the first 12 months,” Schubert said.
Jason Spits
SENIOR JOURNALIST
Jason is a senior journalist with Benchmark Media and writes for the selfmanagedsuper website and magazine and smstrusteenews website. He has covered financial services since 1999 and has written about life insurance, superannuation, investment management and financial advice, in both a freelance and in-house capacity, and also did a brief stint as a media manager for an industry association. He has been the editor of trade titles Money Management and Financial Standard, and was most recently senior journalist with life insurance title Riskinfo.
Articles by Jason