The evolution of super in Australia: Why changes will keep coming

The federal government has proposed that from 1 July 2026, employers will be required to make super contributions at the same time they pay salary and wages.

Part of the government’s ongoing efforts to evolve super, the proposed reform called pay day super is anticipated to lead to better retirement outcomes.

It can also help to address inequalities for casual and part-time workers, and a high proportion of women.

In fact, Industry Super Australia research has found workers in female-dominated industries, such as childcare and personal services, can lose up to $40,000 of their retirement funds on average through quarterly payments.

The move away from quarterly super payments under payday super could help everyone. But it also means the need for an integrated super payment solution within payroll will be critical for employers to meet the increased frequency of super payments.

Why super will continue to evolve

Payday super is just one change in the government’s ongoing drive to address inefficiencies in the super system in Australia.

As a key focus of the Australian Taxation Office (ATO), they’re expanding the use of Single Touch Payroll (STP) data to improve compliance and allow them to follow up employers proactively for non-compliance like late payment, underpayment, and nonpayment of super guarantee.

Mathew Gilroy, founder of Beam and Head of Employer, Platforms and Partnerships at Australian Retirement Trust (ART) commented: “Payday super was only announced in May 2023, yet we’ve already seen the government isn’t shying away from more changes in the industry.

In keeping an even closer eye on STP reporting data, there’s more onus on employers to ensure the accuracy of their super guarantee (SG) payment compliance.

Mathew Gilroy, Founder of Beam

Gilroy added: “This and payday super will exacerbate ten-fold the troubles faced by companies who rely on manual and inefficient payroll processes.

“Undoubtedly, there’ll be more obligations for employers coming.”

How else have inefficiencies been tackled in super?

The government has taken regular steps to tackle inefficiencies in the super industry in the past decade. Such developments include:

• The introduction of SuperStream from July 2014 requires all employers to give payments and related data to super funds electronically.
• Single Touch Payroll (STP) reporting was introduced in July 2018. Companies with 20 or more staff had to report PAYG and super information to the Australian Taxation Office (ATO) at each pay run. On 1 July 2019, this was extended to all employers in Australia.
• Employee onboarding changed with the introduction of “Stapling” legislation in November 2021. If a new employee didn’t nominate a super fund, employers had to request the employee’s existing super account from the ATO directly.

Yet, The ATO estimates 4.9% of super was still not paid in FY20 – totalling around $3.4 billion.

How employers can get ready for future challenges in a fast-moving industry

From an employer’s perspective, payday super will increase pressure on them to get their super payments right – and on time. Some businesses may have to increase their super payment frequency to 52 times per year.

When payroll systems can’t cope with these situations, teams may need to manage these processes manually. This can be labour-intensive and inefficient.

Hiring more payroll staff to deal with extra admin may only be the tip of the iceberg when it comes to costs that could affect employers.

Based on the current super guarantee penalties, the implications of non-compliance, through delayed payments or other errors, can be expensive – up to 200% of the original super amount in some cases.

How employers and software providers can stay ahead

While it isn’t possible to predict future changes, we know super obligations would ramp up with payday super.

Integration is the way for employers and payroll providers to future-proof against further industry changes. Beam’s Mathew Gilroy commented:

“Companies needn’t fear payday super, so long as they stay informed, understand consequences and, in particular, consider payroll software as a method to unlocking successful superannuation contribution management.

“To pay super at the same time as wages, payroll details and super information need to be connected and integrated as much as possible.”

As a complete super payments technology, Beam Super Payments lightens employers’ workloads through its integrated reporting and payment processes.

All super payments are recorded in one place and tracked when each employee’s pay is recorded, allowing employers to keep on top of their obligations.

The compliance-friendly solution lets employers know immediately to fix any mistakes in their payment before they submit.

Gilroy added: “The future is going to be evermore rapid, timely and automated.”

“Payroll software-led technology can be at the forefront in helping employers adapt – now and in the future.”