Super funds show unpreparedness on Payday Super

Since the commencement of Payday Super, super funds have improved their implementation but improvement is required based on the findings from a payroll provider during the transition.

SuperAPI, a payroll reg-tech infrastructure provider, revealed how super funds performed during the first month of the new regime, according to its member verification request (MVR) data.

Over the period, SuperAPI processed some 62,000 MVRs to 171 super trustees on behalf of employers each time they hired a new employee.

Notably, 46% of MVRs across its network received a fund response with "member found" during the first month, while 6% were rejected as "no member found". A staggering 48% remained without a response or were unable to be processed at the point of onboarding.

Under the new framework, participating funds are required to respond to an MVR within 24 hours.

However, across all funds, the proportion of MVRs rejected by super funds fell from 11.92% in the first week of July to 3.04% by mid-August - a reduction of approximately 75%.

The firm said this shows industry performance has "improved" since implementation but highlighted uneven levels of preparedness are emerging across the super sector as funds are still adjusting to the new law.

Commenting, SuperAPI chief executive Riley James said the scale of the industry's transition highlighted the importance of having multiple layers of verification embedded into employer workflows.

"Payday Super has introduced a much tighter operating environment for employers, payroll providers and super funds, and the first month shows the industry is still working through some very understandable teething issues," James said.

"MVR is an important new validation step, but it doesn't help an employee who doesn't know which super fund they are a member of.

"The goal has never been to make employers compliant by sending MVRs. It is to make sure employers have the highest possible confidence that contributions will arrive at the right fund, for the right member, on time."

Among the 10 funds receiving the greatest volume of member verifications over the period - which collectively accounted for 55% of member verifications - three were not validating MVRs during the period measured. In the next 10 highest-volume funds, accounting for a further 14.5%, six returned no positive verifications.

James said the results should be viewed as evidence of a system rapidly maturing rather than a criticism of individual funds, and the remaining gaps reinforce why employers and payroll providers should not rely on MVR as a standalone solution.

"An MVR tells you whether the receiving fund can validate a member at that point in time. It does not replace the other checks that should happen during onboarding," James said.

"ATO Stapling, direct fund lookup APIs, and an MVR together create a much stronger validation chain. When those services are embedded directly into payroll and HR software, employers can resolve issues before they become failed contributions or compliance problems.

"This is a shift away from fixing errors after a contribution has failed, towards getting the data right before the money moves."