In the 2023-24 federal Budget the Australian Government announced that from 1 July 2026, employers will be required to pay their employees’ super at the same time as their salary and wages.
While this measure is not yet law, it’s important to start planning for the change, especially if you are currently making SG payments quarterly.
Why was payday super proposed?
The government proposed the change to help improve retirement outcomes for Australian workers.
Smaller, more frequent super payments can reduce the impact of share market volatility on a worker’s super balance.
“By switching to payday super, a 25-year-old median income earner currently receiving their super quarterly and wages fortnightly could be around $6,000 or 1.5 per cent better off at retirement.”1
Payday super will also help the Australian Taxation Office (ATO) detect and recover unpaid super. The ATO estimates employees were owed $3.4 billion worth of super in 2019-20.
The current payday super timeline
- 2 May 2023 – payday super is announced in the federal Budget.
- 9 October 2023 – the government releases the Securing Australians’ Superannuation consultation paper and seeks feedback from key industry bodies for small business, private groups, tax and superannuation.
- 3 November 2023 – the consultation period closes.
- 1 July 2026 – payday super is scheduled to begin (if the measure becomes law).
What does payday super mean for employers?
Paying super on the same day as employees’ regular pay could help employers streamline payroll processes and avoid penalties for late super payments.
Adapting to the new payment frequency may be more challenging for some though as Mathew Gilroy, ART’s Head of Employer, Platforms and Partnerships explained at our Future of Super event:
“We’re going to see about 90,000 employers move from paying us 4 times to paying us 26 times per year. We’re going to see another 40% move from paying us 12 to 26 times per year. Some businesses pay wages weekly. So, that means you have to pay super 52 times a year.”
The increased payment frequency means employers will need to rely on technology to meet the administrative burden.
Mat said, “I think where we’re going … is to a future of integration. Where everything happens in payroll. Where an employee has to onboard digitally. Where stapling of a super fund to an employee could potentially be something that feeds into payroll. You actually take someone’s TFN, and their credentials, and the ATO tells you who their fund is digitally. And all of a sudden, you’ve got much more efficient and effective access to the data that you need to meet your obligations. But it’s a seismic change to the infrastructure that processes billions of dollars every year for millions of people.”
The engine behind ART’s Employer Online super payment solution, Beam, also partners with payroll providers to offer simple super payments to thousands of small businesses.
It’s solutions like Beam, working seamlessly with an employer’s payroll processes, that will help employers meet the demands of higher frequency super payments.
How to prepare
Although payday super isn’t scheduled to start until 2026, it’s important to be prepared. Consider the payroll process updates you may need to make for higher frequency super payments. And keep an eye on your inbox for more information from ART. We’ll let you know if this measure becomes law and how we can help you continue to meet your super obligations.