New government must prioritise payday super: SMC

Super Members Council (SMC) is urging Australia's newly elected government to pass the payday super legislation as a matter of priority within its first 100 days in power.

The council's analysis found that in 2021-22, about $5.1 billion of super went unpaid for 2.8 million Australians. This equates to an average underpayment of $1800 per worker.

In its submission on the draft legislation, SMC makes nine recommendations for the incoming government.

One is to extend the payment processing deadline from seven calendar days to seven business days.

SMC pointed out flaws in the payment processing under the current Bulk Electronic Clearing System (BECS) banking system, which is not optimised to meet the aims of the policy.

"While investment in developing the New Payments Platform (NPP) banking system to enable a wholesale migration to data-rich real-time payments continues, this technology is currently immature and out of scope of the payday super policy, reliance on its completion ahead of the July 2026 deadline poses challenges to a full day 1 end state of full compliance," the submission read.

The Reserve Bank of Australia's (RBA) recent risk assessment report stated that the suitability of NPP for business-to-business (B2B) payments has not been properly assessed yet.

Gateway Network Governance Body warned of clear indications that the system is not yet viable to be used as the only B2B payment system.

The Institute of Financial Professionals Australia (IFPA) wants businesses with 10 or fewer employees to be exempt from the payday super regime and continue as quarterly superannuation guarantee (SG) contributors.

"The additional administrative burden of more frequent SG payments would be particularly challenging for these businesses, many of which lack access to appropriate payroll systems and resources to manage the increased compliance requirements," IFPA said.

SMC also suggests that the Australian Taxation Office (ATO) clearly articulate its proposed transition, with a "phased approach to enforcement to give comfort to employers who genuinely try to do the right thing but are unable to due to circumstances beyond their control".

"The ATO expedite efforts to uplift the existing stapling service or develop a new service to permit real-time integrated validation of employee fund details for any payroll run," SMC said.

Payday super is set to take effect from 1 July 2026, three years after it was announced in May 2023.

SMC chief executive Misha Schubert said payday super will dramatically reduce the level of unpaid super, improve compliance with the law and make the super system fairer for workers and businesses alike.

"Over the coming year, concerted effort will be needed from the ATO, employers, payroll personnel, digital service providers, and super funds to prepare for this crucial reform," Schubert said.