2026 introduction of payday super is deliberate: Chalmers


Treasurer Jim Chalmers has responded to criticism of the government's plans around the introduction of payday superannuation, saying holding off until 2026 is deliberate and will give employers plenty of time to get it right.

Unpaid superannuation is equivalent to wage theft. However, the ATO reported there is an estimated $3.6 billion in unpaid super between 2020 and 2021. In response, the government will require super be paid on payday, effective July 1, 2026.

Industry Super Australia (ISA) has predicted that the amendment will benefit millions of Australians' retirement incomes and that the change will add around $55,000 to balances at retirement.

treasurer jim chalmers

The reform has been praised as a win-win solution, seen as a tool to optimise members' outcomes in retirement. However, its perceived drawback lies in the delay in implementation.

In a recent interview, Chalmers explained that the decision to delay the reform until 2026 was deliberate.

"We want to ensure that employers have the opportunity to get this right. We have deliberately given them a longish run-up to make sure that they can get all the systems in place so that we can address this problem, which has been hanging around for too long," he says.

He acknowledged that for too long, people haven't received the super they're entitled to.

"We want to fix that, and payday super is part of the solution to that challenge," he says.

"It will mean more super for more workers. We recognise that people need the time to get the systems in place, and we've allowed that. At the end of the day, this will be a stronger superannuation system, where people get the super that they've earned and that they're entitled to."

Despite the reasoning, independent consultant and adviser Stephen Huppert says pushing back the start date is a little bit disappointing due to the member impact.

"I suspect the main thing is to keep the employers happy," he explained in a recent episode of the Financial Standard podcast.

"Some of the employers who are currently only paying quarterly, even though they might pay payroll, fortnightly or monthly, they'll have to adjust the payroll systems."

Additionally, he says many employers also use third-party payroll systems.

"So, it will be up to those third parties to adapt their payroll systems to payday super," he explained.

"I suspect that's why they've given quite a significant lead time to be able to comply."

Huppert says he is confident there is adequate time for super funds to get on board with the new framework.

"I'd suspect super funds would be very happy if it was even earlier, maybe 2025 rather than 2026," he commented.

He concurred that employees should also have sufficient time.

"I don't know enough about payroll systems, but I wouldn't have thought paying super with salary would require significant changes to payroll systems and to employer payroll processes," he says.

"After all, they already submit payroll to banks, so they just need to be able to submit superannuation with payroll to super funds."

He explained that some employers will always see superannuation contributions as a bit of a cash flow balancing item; however, the reform will lessen liabilities.

"When the government released the consultation paper, they did highlight some advantages for employers. One of the key ones being that it would be easier for the employer running the business because their liabilities wouldn't build up quarterly, they would only build up over the month," he says.

"So, there are some benefits to employers. But most of the benefits will go through to the members."

This article first appeared on Financial Standard

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Cassandra Baldini was a senior journalist at Financial Standard from June 2022 to December 2023. Prior to this, she was a reporter at the Daily Telegraph's digital subsidiary News Local covering court, crime and community news. She held various roles at Bloomberg in the London newsroom, and worked at Vanguard and Sony. She has a Bachelor's degree in Journalism from Macleay.
eric coyle
December 6, 2023 6.07pm

A weak government not caring about workers and deserting the people they are supposed to champion. Then when you are guaranteed to retire on a massive pension who cares about the peasant certainly not labour. .