Without a significant platform and regulatory overhaul, the proposed shift to paying super each and every time an employee is paid is destined to cost superfund members immense value. Instead of 4 transactions per year it becomes 52 for weekly payroll. More payments, more payment fees, software process fees, bank fees, superfund administration fees.
Since first being touted in 2015, the systems that require and enable payment of super from the employer through a myriad of intermediaries, payment and data platforms to eventually be allocated to the member’s account in a superfund have not modernised with a view to allowing efficient payday super.
The government’s own Super Clearing House has to complete full data matching and payment of one batch before it can even accept instructions or funds for the next batch. It barely copes with performing this task 4 times per year (quarterly super). It will never be able to cope with processing super each payday.
Approximately 250,000 employers use this clearing house; a contemporary replacement providing efficient superfund interactions is required, especially before payday super is implemented. What is the government’s solution to support small businesses?
ATO reports that 94% of super is paid on time by willingly compliant employers. Anecdotal evidence suggests that of the 6% not paid on time, 3% are mistakes or system-generated issues that are fixed reasonably proactively. The other 3% are deliberate nonpayers who should be detected and prosecuted by an effective regulator quickly.
Others argue that payday super is the panacea for ensuring all employees receive their maximum super value and stopping super theft. It’s not the whole picture. An employee’s value in their superfund will super from increased costs in the system.
With a transition to payday super, employers, superfunds and therefore employees will now be paying additional costs associated with super payments. More payment and data transaction fees are required as the payday super amounts are processed through software, banks, and payment gateways. How much extra costs to administer the superfunds that will also be at a cost to member’s value?
I have yet to see any explanation from the superfunds as to how they are going to deal with so much more data, so many more rejected transactions and information requiring checking, and at what cost.
With an alleged start date of 1st July 2026 there is significant work to do by all the parts of the system to make this work.
But it could work… eventually.
The adoption of a New Payment Platform or NPP (using PayID or PayTo services) to support super payments from payroll so ware to super funds (or their administrators) should enable direct money straight to the member’s account.
Let’s remove the legacy administrative processes designed in a very different era (1991) that no longer add value in a digitised and streamlined world.
Employee superfund information is the bugbear of every employer. Onboarding a new employee into payroll, and matching employee provided information when it is transmitted to a superfund cause a massive amount of errors and rejections, and that’s why most employers pay super monthly or quarterly.
Government has most of the data to support better employee onboarding and streamline information flow to employers. While employers can, in theory, access a new employee’s existing fund information through a Stapled Fund service, this service is not yet fit for purpose.
Employers are blamed for so much of the loss of super value to employees. Yet they rely on the employee to provide the right and up-to-date information, the clearing houses to make the contribution get to the right member’s account in the right superfund and the payment gateways and data transmission systems. Other than initiating the payment, all other parts are out of their control.
Employers should not be penalised by the antiquated and not fit-for-purpose SG Charge penalty regime when they are not responsible for all parts of the system.
A quick move to payday super is not the answer.
The Government and Superfunds must embrace a plan to modernise and develop a fit-for-purpose information and payment super system.
Payment of super by employers on a monthly basis won’t break the existing systems and should be the vision for 2026.
Adoption of NPP, modernisation of the data requirements, an efficient employee superfund information system, and better, quicker processing by all should result in maximum value to superfund members.
The payday super journey is appropriate but needs to be co-designed and the Superannuation Guarantee system modified. Most employers are not the problem. Rather than scream about the gap, let’s also acknowledge the willing on time compliance by the majority.
— Matthew Addison, Executive Director, Institute of Certified Bookkeepers
References
ICB – Payday Superannuation Announcement
ATO – Payday superannuation (QC72411)
Treasury – Payday Super factsheet
