About one-in-four workers across Australia currently miss out on about $5 billion in super each year – which averages out at $1,700 for each worker whose super is not paid. For those affected, this can mean more than $60,000 less in super savings by retirement, forcing more reliance on the age pension.
A key cause of this challenge was laws made in the 1990s that only required employers to pay super contributions quarterly, out of alignment with the payment of wages. Most workers assume their super is paid with wages because that’s what appears on their payslip.
While many employers pay their employees’ super entitlements on payday, some hold off paying for up to 4 months, building up significant liabilities that some then find difficult to pay on time or at all.
The proposed payday super solution will be effective
In the 2023 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.
As well as reducing the incidence of unpaid super through more timely visibility that it has not been paid, paying super more frequently generates higher super balances through additional investment returns and compound interest on super paid fortnightly instead of quarterly. That will benefit 4.7 million workers who are currently paid super quarterly. A 30-year-old on median wages would have an extra $8,000 at retirement generated.
Payday super helps women now
Women will also be better off, given over 1 million missed out on $1.3 billion in super contributions in 2019/20 alone. Low-paid women in female-dominated industries are the most affected, with some missing out on $40,000 by retirement. Unpaid super adds to the retirement saving challenges for many women, who already miss out on super due to time out of the workforce while caring for children. Payday super will also deliver these women more super – as will the policy decision to introduce legislation to make super payable on the Government’s paid parental leave scheme from July 2025.
Other benefits from payday super
Payday super smooths out payroll management for business. Most are already using electronic payroll systems that enable payday super and that removes the burden of time-consuming quarterly reconciliations.
Making more frequent contributions helps small and medium sized businesses avoid large liabilities at the end of each quarter that can be hard to manage.
Payday super puts all employers onto a level playing field, eliminating the unfair advantage that some get by holding back super contributions or not paying them at all.