From today, employers must pay super at the same time as wages, a change that will leave the average young worker around $5,200 better off in retirement.
The Payday Super reform, which commences with the new financial year on 1 July, ends the long-standing practice of super being paid as infrequently as once a quarter.
ASFA Chief Policy Officer James Koval said that while Payday Super would be a significant change for businesses, many had already made the switch.
“Super funds are already seeing super flowing more regularly into members’ accounts each pay day, from employers that are large companies through to small businesses.
“While this is no doubt a significant change for many businesses, it’s also one that has been underway for several years. Indications are that many employers are either ready for Payday Super or have already transitioned,” Mr Koval said.
Payday Super will improve the retirement outcomes of millions of Australians in two ways: getting super invested sooner so it earns compound returns for longer, and tackling the problem of unpaid super, which sees more than $5 billion in retirement savings withheld from Australian workers each year.
“For too long, super could sit in an employer’s account for months before it reached workers, earning nothing for their retirement in the meantime. From today, it arrives at the right time and in the right place: in your super account, as you earn it, where it can start earning returns straight away.
“The sooner super is invested, the longer it earns returns. For a 25-year-old on the average wage, moving from quarterly to fortnightly super adds up to at least $5,200 more in savings by retirement,” Mr Koval said.
“The reform also makes unpaid super easier to catch. Under the quarterly system, workers often notice missing super four to six months after earning it. By then, the business may have gone into liquidation, meaning the worker’s super money cannot be recovered.
“Young people and tradies are the most likely to miss out under the current system, and they’re the ones this change protects most,” Mr Koval said.
Mr Koval encouraged workers to keep an eye on their account in the first few pay cycles.
“My recommendation to every worker is to check that super is actually landing in your account, not just appearing on your pay slip. If something looks off, talk to your employer first, and then the ATO if you need to,” Mr Koval said.
Members of the media may contact:
Scott Roberts
Media and Content Lead
sroberts@superannuation.asn.au
0451 949 300
About ASFA
ASFA is the peak policy, research and advocacy body for Australia’s superannuation industry, and the only industry body that represents all parts of the APRA-regulated system.
Our more than 100 members include retail, industry, corporate and public sector funds and their service providers. For over sixty years, ASFA has been the voice of super, advocating for a dignified retirement for all Australians. Through research, advocacy and collaboration, ASFA promotes efficiency, sustainability and trust in Australia’s world-class retirement income system.