The Labor government this week announced a major shift to “payday super” as a way to crack down on billions of dollars in unpaid funds each year.
Starting from July 2026, businesses will need to pay their employees superannuation on payday rather than once a quarter, making regulatory enforcement easier and helping dissuade dodgy or insolvent employers from doing the wrong thing.
It comes as a new report from market research Rainmaker Information found that despite tumultuous capital markets, the Australian superannuation market was currently in its “most robust shape ever”.
Rainmaker attributed this to record contributions of $163 billion into Australian superannuation accounts in 2021 and 2022, with 60 per cent of contributions belonging to employers.
According to research from Rainmaker, contributions have increased by 13 per cent — the third-highest annual lift since the GFC.
What’s more, Rainmaker Executive Director of Research and Compliance Alex Dunnin said the driving force behind the contributions was a 9 per cent increase in employer contributions and a “staggering” 23 per cent increase in member contributions.
In fact, Australians paid — on average — 17.4 per cent of their total wages and salaries into superannuation in the year 2021-2022. The compulsory rate as of June 2022 was only 10 per cent, meaning even though most people only pay the compulsory rate, on average, Australians pay much more.
The research from Rainmaker suggests that Australians have shifted to paying superannuation in lump sums over the past few years, which has now become the ‘new normal’.
However, the market research company raised equity concerns, casting a light on how generous superannuation tax concessions should be for people on high incomes.
“Contributions into superannuation were so strong through the past decade that each year they exceeded the amount paid as benefits by an average of 30 per cent,” Mr Dunnin said.
Yet, with the introduction of payday super, Aussies can expect even more cash flowing into their retirement nest eggs, with the potential to receive $50,000 more at retirement, according to Industry Super Australia.
“Aligning payment of super and wages is the right thing to do by workers, boosts government revenue, lifts investment returns and puts all employers on a level playing field,” Industry Super Australia Chief Executive Bernie Dean said.
While the superannuation market remains strong and has continued to provide a stable platform for retirement savings, Rainmaker’s Mr Duninn said the super industry was nevertheless undergoing “profound disruption”.
“Another major strategic shift is that the increasing rate of superannuation guarantee (SG) contributions, on its way to 12 per cent, has been accompanied by the squeezing down of the rate of voluntary member contributions,” Mr Dunnin said.
Rainmaker said the disruption should enforce super funds to sharpen their offerings, become more efficient and improve their businesses, with the “big winners” being super fund members.