Superannuation Reform

Starting 1 July 2026, the Australian government will require employers to pay employees' superannuation contributions concurrently with their salaries and wages. This significant reform aims to strengthen Australia's superannuation system, ensuring a more comfortable retirement for workers and streamlining payroll management for employers.

The Benefits of Payday Super

Payday super is a simple yet powerful change with numerous benefits for both employees and employers. A 25-year-old median income earner currently receiving their super quarterly and wages fortnightly could see an increase of around $6,000 or 1.5% in their retirement savings.

For employers, more frequent super payments will lead to smoother payroll management and fewer liabilities accumulating on their books. Employees, on the other hand, will find it easier to track their super payments, reducing the risk of exploitation by unscrupulous employers.

This reform will particularly benefit workers in lower-paid, casual, and insecure positions who are more likely to miss out on less frequent super payments. Notably, women are overrepresented in this demographic.

Addressing Unpaid Super and Strengthening the System

While most employers comply with super payment requirements, the Australian Taxation Office (ATO) estimated that $3.4 billion worth of super went unpaid in the 2019-20 financial year. To address this issue, the ATO will receive additional resources to detect unpaid super payments earlier. The government will also set enhanced targets for the ATO to recover outstanding payments.

In the second half of this year, Treasury and the ATO will consult closely with industry stakeholders to refine these changes.

Preparing for the Change

The 1 July 2026 start date gives employers, superannuation funds, payroll providers, and other parts of the superannuation system ample time to prepare for this significant change. By aligning super payments with salaries and wages, the Australian government aims to create a more secure and transparent superannuation system for all workers, ensuring a more dignified retirement for millions of Australians.

For more information, email Kathy today at kathy@hillsaccounting.com.au or Phone 03 6273 7800