Australian workers are set to retire with thousands more in their superannuation accounts thanks to more frequent payments from employers.
From July 1, 2026, employers will need to pay super at the same time as wages and salary.
The changes will leave the average 25-year-old earner about $6000, or 1.5 per cent, better off in retirement because more frequent payments leave more time for compounding interest.
Treasurer Jim Chalmers said the simple change was common sense.
“It will strengthen the system and will boost retirement incomes,” he told ABC Radio.
“The main reason for that is it will make it less likely that people will miss out on the super that they’ve earned and that they’re entitled to.”
The Australian Taxation Office estimates $3.4 billion in super was unpaid in 2019/20.
The ATO’s resources will be boosted to crack down on compliance and it will have a new target for recovery payments.
Super Consumers Australia said the decision would better enable people to manage their money and ensure they are paid what they are owed.
“Our recent survey found the majority of people don’t realise they can report non-payment to the ATO and that it is the regulator’s responsibility to investigate,” the organisation’s director Xavier O’Halloran said.
“We encourage people to report unpaid super to the ATO if they can’t resolve the issue directly with their employer.”
The Association of Superannuation Funds of Australia said it was important employers were held to account.
“Left unaddressed, the issue of unpaid superannuation guarantee contributions comes at a significant cost to people’s retirement,” deputy CEO Glen McCrea said.
“For example, a 35-year-old on $65,000 per year who misses out on SG for two years would be around $24,000 worse off in today’s dollars at the time of retirement.”
Chair of the Council of Small Business Organisations Australia, Matthew Addison, said payday super would lift processing costs for all parties, including super funds.
He told AAP that would ultimately push up administration fees for employees and eat into super balances.
Mr Addison said employers would bear the cost of additional payroll software, as well as more frequent transactions, through the mandatory clearing system used to send money to super funds.
The council is urging the government to consult with small businesses on a workable system that won’t lift processing costs or unfairly punish compliant employers for the poor behaviour of a few companies that deliberately avoid paying super.
The council would also prefer businesses with fewer than 15 employees to choose monthly super payments and opt for more frequent payments if desired.
However, Mr Addison welcomed the long lead-up time, which he said would give businesses a chance to adapt to more frequent payments.
Dominic Giannini and Poppy Johnston
(Australian Associated Press)