The ‘immense pressure’ on employers from payday super

The move to payday super will be a bigger shift than to SuperStream and employers will have to ensure their systems are smooth as they move to the potential of paying super 52 times a year. 

Speaking in Sydney, Australian Retirement Trust (ART) head of employer, platform and partnerships, Mat Gilroy, said it would be big change for many firms that should not be underestimated.

Payday super will see employers pay super with wages rather than on a quarterly or monthly basis, meaning some firms could be paying super 52 times a year if they operate weekly wages.

In 2019-2020, the Australian Taxation Office (ATO) estimated $3.4 billion worth of super, or almost 5 per cent of the total expected Superannuation Guarantee contributions for the year, went unpaid.

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Around 90,000 employers would move from paying on a quarterly basis to paying on a fortnightly basis, Gilroy said, which will create an “immense pressure” on employers to get it right every time.

Gilroy said the changes, which will come in from 1 July 2026, will be bigger than the move to SuperStream payments which saw employers move to paying super electronically.

He said: “Payday super will fuse a lot of these past payroll events together. I think the government and regulator have seen the interactions were largely manual and over the last few years we are moving to digitalisation but we are only halfway there, a lot of employers still do things on paper.

“Where we are going is to a future of integration where an employer has to onboard digitally and you will have much more efficient access to the information you need. This is a seismic change to the infrastructure that processes millions of dollars every year.

“If you are a high turnover organisation that is bringing on thousands of people each quarter and paying them weekly, that’s an interesting shift and you can see why technology is becoming more important in this environment.”

He said he expected superannuation payments and employee onboarding will mould together in one type of products. 

“More people will move to an integrated, centralised payroll solution and they want to help their customers but those firms also want to make money so there’s a balancing process that will have to happen in the consultation.”

A second change to come from the consultation would be how a new employee picked a super fund as firms may no longer be able to suggest a default fund to them.

“The first option is a ‘napalm’ option where there is no promotion of super funds possible at all by employers. The other option is mandatorily involving the ATO to find an employee’s fund and the third option is they must offer the stapled fund they already have first before offering an alternative.”