A government change requiring superannuation to be paid on payday could mean a young employee will be several thousand dollars better off by retirement.
The reform – which will not come in until July 1 2026 – will benefit the retirement incomes of millions of Australians, according to Treasurer Jim Chalmers and Assistant Treasurer Stephen Jones.
They give the example of a 25-year-old median income earner presently receiving their super quarterly and their wages each fortnight, who could be about $6000 (or 1.5%) better off when they retire.
The ministers argue there will be benefits to bosses, as well as to the workers, in the change. “More frequent super payments will make employers’ payroll management smoother with fewer liabilities building up on their books.”
They say payday super will mean employees can keep track of the payments more easily and it will be more difficult for disreputable employers to exploit them.
“While most employers do the right thing, the Australian Taxation Office (ATO) estimates $3.4 billion worth of super went unpaid in 2019-20.”
The ATO will get extra resourcing to help it detect unpaid super payments earlier. Treasury and the ATO will consult stakeholders on the changes later this year.
The ministers say the July 1 2026 start will give employers, superannuation funds, payroll providers and other parts of the superannuation system enough time to get ready for the change.
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This article was originally published on The Conversation. Read the original article.
