The ‘super’ solution to a perfect retirement plan

Key points:

• You can only withdraw your super money in certain circumstances — for example, when you retire or turn 67 years old

• From July 1, 2023, the super guarantee rate is 11 percent

• Further increases of 0.5 percent are scheduled each financial year until 2025 when the super guarantee rate reaches 12 percent

The newly formed Super Members Council has announced that outdated laws requiring employers to only pay superannuation quarterly were a key reason many lower-paid workers were not getting their super in full and on time.

Interim Chair of the Super Members Council Nicola Roxon said the government commitment to switch from quarterly to payday super was a step towards fulfilling the intended policy for a financially secure retirement for every worker.

“This is a simple change with a big positive impact for millions of Australians,” Ms Roxon said.

“With the typical retiree having a super balance of $200,000, super provides financial flexibility and peace of mind at retirement — unpaid super was putting that dream at risk for too many Australians.

“Payday super dramatically reduces unpaid super giving more Australians a dignified retirement.”

New SMC cameo modelling reveals payday super could add up to $36,000 to the retirement balance of workers in the lowest 20 percent of wage earners.

Payday super was first announced in the 2023 – ‘24 Federal Budget and is proposed to commence from July 1, 2026.

The super guarantee gap was estimated to be as high as $3.6 billion dollars in 2020 – ‘21 by the Australian Taxation Office, which has sought to identify non-compliance and take a proactive approach to hidden wages.

A new SMC analysis of the ATO sample file has found that, on average, 2.8 million people are underpaid a total of $4.7 billion super in a year. SMC’s submission to the Securing Australians Super consultation shows that lower-income workers and younger women are disproportionately impacted by unpaid super.

“Removing system glitches that deny workers super’s transformative benefits is a key plank of the Super Members Council’s mission to protect and promote the interests of our 10 million members,” Ms Roxon said.

“This payday super measure is an example of what can be achieved when we put Australian workers at the heart of super policy development.”

Millions of Australians are set to benefit from the measure, either via the reduction of unpaid super or a higher retirement balance due to more frequently paid employer super contributions attracting compound interest for longer.

“Moving to payday super modernises outdated laws, making the system fairer and more equitable for workers and employers alike,” Ms Roxon said.

“It will help ensure super is paid on time and in full, meaning Australians can have trust and confidence that the super system is working for them — not against them.”

From the 2026 – ‘27 financial year onward, when the ATO’s data and compliance capabilities are upgraded through the implementation of the Securing Australians’ Superannuation package, the ATO will publish improved SG recovery measures.

These measures are set to provide useful and clear insights into employer compliance with SG obligations and the efficacy of the ATO’s capability to identify and recover unpaid SG.

Improvements in the ATO’s ability to recover unpaid SG will require the ATO to reassess debt recovery processes and policies to ensure that employees receive their SG contributions.

What do you think about the move to payday super? Have you ever had to chase your employer to receive unpaid super? Let the team at Talking Aged Care know and subscribe to the FREE weekly newsletter for more news, information and updates.

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