Change seeks to improve retirement incomes for 'millions of Australians'
Starting July 2026, employers across Australia will be mandated to pay their employees' super on payday, Treasurer Jim Chalmers announced on Tuesday.
"This simple change will strengthen Australia's superannuation system and help deliver a more dignified retirement to more Australian workers," Chalmers said in a media release.
The government cited as an example the case of a 25-year-old median income earner who is receiving their super quarterly and wages fortnightly. Under the reform, this individual could be around $6,000 or 1.5% better off at retirement.
Chalmers said the reform will benefit the retirement incomes of "millions of Australians."
"The change will particularly benefit those in lower paid, casual and insecure work who are more likely to miss out when super is paid less frequently. Women are overrepresented in this group," Chalmers said.
The reform comes after the Australian Taxation Office (ATO) estimated that $3.4-billion worth of super went unpaid in 2019–20.
Payday super will take effect on July 1, 2026, to provide employers, superannuation funds, payroll providers, and other parties involved with sufficient time to prepare for the change.
Tracking payments
Meanwhile, the government said payday super will also make it easier for employees to track their payments.
The ATO will be getting additional resources to help it detect unpaid super payments earlier. It will also have enhanced targets for the recovery of payments.
"Treasury and the ATO will consult closely with industry and stakeholders on these changes in the second half of this year," Chalmers said.
Aware Super CEO Deanne Stewart previously said Australian women are retiring with 30% less than their male counterparts, attributing the problem to wage inequality that they face once they enter the workforce.
'A big win' for employees
Industry Super Australia (ISA) chief executive Bernie Dean called the reform a "big win" for employees.
"Aligning payment of super and wages is the right thing to do by workers, boosts government revenue, lifts investment returns and puts all employers on a level playing field," Dean said in a statement.
According to Dean, the change could give millions of Australian $50,000 more at retirement, while also stamping out the unpaid super scourge that cost workers $33 billion in over seven years.
"This is a big win for the three million mostly young and lower-paid Australians unfairly deprived the super they've earned and will give them a better shot at building a good nest egg for retirement," Dean said.
