Why is payday super reform still stuck in limbo?

For more than 18 months the Australian government has been weighing a seemingly obvious reform: requiring employers to pay super at the same time they pay wages. 

Surprising as it sounds, that’s not how it works right now. 

Employers are only required to pay superannuation quarterly, which can leave workers missing out on up to $7,700 in their retirement balance due to the delayed contributions, according to the Super Members Council (SMC).

Despite the clear benefits, the proposal remains in limbo - a situation Super Members Council chief executive Misha Schubert says needs to change.

“Paying super on payday will modernise the super system to stem underpayments for workers. This urgently needed reform will be fairer for both workers and employers,” Schubert says.

She points to recent data showing strong public support for the reform, with 74% of Australians backing the change and just 3% opposed.

“Australians want payday super to be law. With an election due shortly, both workers and employers deserve certainty that payday super is going ahead on time, with full support from both major parties.”

The cost of unpaid super

Unpaid super is far from a minor issue. According to a recent SMC report, in the 2021-22 financial year alone, 2.8 million Australians missed out on a combined $5.1 billion in super - around $1,800 per affected worker. 

That’s money that should have been growing in retirement funds but never made it there.

And the impact isn’t evenly spread. Women, young workers and people in insecure jobs are more likely to be underpaid, often carrying that disadvantage all the way to retirement. Small and micro business employees also face higher risks, as smaller employers can struggle with making super payments on time (much less quarterly).

In some parts of the country, the scale of underpayment is staggering. Places like Sydney (NSW) and Durack (WA) each saw more than $45 million in unpaid super in a single year.

While many businesses already pay super more frequently than quarterly, there’s currently too much room for missed payments and errors. Payday super would address much of this, by making it harder for underpayments to slip through the cracks.

“Millions of Australians are paying the price every single day their super goes unpaid – they cannot afford any delay to the introduction of payday super,” Schubert says.

Staying engaged with your super

Payday super reforms would go a long way to ensuring your super guarantee is paid on time, every time - but you still need to do your part. Therefore, it’s worth checking in now and again to make sure everything is on track.

Here’s how to stay on top of it:

• Review your contributions. Ask your employer whether they pay super on payday or quarterly, then check your super fund to see if the money has actually been paid. If anything looks off, reach out to your fund or the ATO to help you investigate.
• Look at your fund’s performance and fees. If your balance isn’t growing as expected or fees seem high compared to your returns, it might be time to explore other options.

• Think about your long-term strategy. Super isn’t just about what’s being paid now, it’s about how it’ll grow over decades. Ensure your current investment mix and fund align with your retirement goals.

Not sure if your fund’s delivering? Check out the winners of the latest Mozo Experts Choice Awards for Superannuation - or browse some of the top-performing super funds below.

Vanguard disclaimers: 

^Independent fees and costs benchmarking conducted by Deloitte, shows Vanguard MySuper Lifecycle as one of the lowest fee MySuper products as at 1 March 2024. Deloitte has only included publicly offered APRA regulated superannuation funds. The benchmarked fees and costs reference ongoing annual fees and costs disclosed in the PDS. Other fees and costs may apply.

^^Lifecycle up to the age of 47, annualised performance since launch at 5 October 2022, performance returns are calculated using the sell price, which is net of investment fees and tax. Other charges, fees and costs may apply. Past performance is not a reliable indicator of future performance.