Workers to be better off under new plan to force employers to pay super on payday
News.com.au
May 2, 2023
Businesses will have to pay superannuation to workers every pay cycle rather than waiting for the end of the quarter. The Treasurer says the move will allow Australians to keep better track of their superannuation. It will also have a financial benefit, with a young worker aged 25 set to be around $6,000 better off by their retirement.
Millions of Australians will be better off under a budget plan to finally force employers to pay super on payday instead of hoarding the cash.
Under the big changes, penny-pinching employers will be required to pay super contributions at the same time as wages.
According to super experts, it would result in some younger workers today being better off by $50,000 at retirement.
Currently, employers are only required to make superannuation payments every three months.
That is allowing some employers to hoard the money and keep it out of workers’ retirement savings accounts where it could be making money.
But from July 1, 2026, employers will be required to pay their employees’ super at the same time as their salary and wages.
Workers will be better off by thousands of dollars.
“This simple change will strengthen Australia’s superannuation system and help deliver a more dignified retirement to more Australian workers,’’ Treasurer Jim Chalmers 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.
“More frequent super payments will make employers’ payroll management smoother with fewer liabilities building up on their books.
“Payday super will also make it easier for employees to keep track of their payments, and harder for them to be exploited by disreputable employers.”
Dr Chalmers said 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 over-represented in this group.
“While most employers do the right thing, the Australian Taxation Office (ATO) estimates $3.4 billion worth of super went unpaid in 2019-20,’’ he said.
“To further strengthen the system, the ATO will receive additional resourcing to help it detect unpaid super payments earlier and the Government will set enhanced targets for the ATO 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.
Treasurer Jim Chalmers said the change will be fairer to workers.
“The 1 July 2026 start date will provide employers, superannuation funds, payroll providers and other parts of the superannuation system with sufficient time to prepare for the change.”
Industry Super Australia said that moving super payments to align with wages could give millions of Australians $50,000 more at retirement.
Quarterly super payments will also make it easier for the ATO to monitor compliance in real time and act quickly when a complaint is lodged over unpaid super.
“This is a big win for the three million mostly young and lower paid Australians unfairly deprived of the super they’ve earned and will give them a better shot at building a good nest egg for retirement,’’ said Industry Super Australia Chief Executive Bernie Dean.
“The government should be commended for listening and then taking the necessary steps to end the huge super rip off which was undermining the future economic security of too many young women and others on lower incomes.”
“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.”
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