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Payday super embraced as setting a ‘level playing field’ for employers

4 minute read

The superannuation industry has expressed its support for the federal government’s move to mandate the payment of super at the same time as wages.

Leading superannuation industry bodies have welcomed the federal government’s introduction of payday super, which they have suggested will put all employers on a level playing field while improving the retirement balances of millions of Australians.

The move was announced in a joint statement by Treasurer Jim Chalmers and Minister for Financial Services Stephen Jones on Tuesday, who confirmed that employers would be required to pay super at the same time as their employees’ salary and wages from July 2026.

“This simple change will strengthen Australia’s superannuation system and help deliver a more dignified retirement to more Australian workers,” they said.

The Australian Institute of Superannuation Trustees (AIST) noted that it and other key bodies, including Industry Super Australia (ISA), had been calling for this measure for a long time.

“We know the majority of employers do the right thing, but some do not and, given superannuation is deferred wages, it makes sense that it be paid at the same time as salary and wages,” commented AIST chief executive officer Eva Scheerlinck.

Ms Scheerlinck said that it has previously been suggested that paying super more frequently than quarterly would be a burden for employers.

“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,” she stated.

“It will also give employees and the Australian Taxation Office earlier visibility of underpayment 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.”

As part of their announcement, Treasurer Chalmers and Minister Jones indicated that the ATO would receive additional resourcing to help it detect unpaid super payments earlier. The government is also planning to set enhanced targets for the ATO for the recovery of payments.

ISA CEO Bernie Dean said that the government should be commended for listening to stakeholders and taking the necessary steps to end what he described as a “huge super rip off”.

“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,” he said.

The Association of Superannuation Funds of Australia (ASFA) said that payday super ranked at the top of its list of recommended measures to improve super guarantee (SG) compliance.

“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,” said ASFA deputy CEO Glen McCrea.

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

ASFA also suggested that the 1 July 2026 start date for the new measure would provide the ATO and businesses with “ample lead time” to update their systems and processes.

Industry super fund HESTA was also among those to have expressed support for the introduction of payday super, in particular its benefits for women and low-paid workers.

“It is important to remember that some employers were already paying super with wages, and this change will mean it is a level playing field for all,” HESTA CEO Debby Blakey added.

Ms Scheerlinck urged employers to adopt the new measure before it becomes mandatory.

“There’s nothing to stop employers from paying super at the same time as wages, so I’d encourage employers wanting to differentiate themselves and be viewed as employers-of-choice to adopt the approach immediately,” she said.

The government said that a 25-year-old on the median income, who is currently receiving their super quarterly and their wages fortnightly, will be approximately $6,000 or 1.5 per cent better off at retirement following the switch to payday super.

The ATO has estimated that $3.4 billion worth of super went unpaid in the 2019–20 financial year.