SMC urges bipartisanship on payday super reform, cites systemic underpayment

The Super Members Council (SMC) has urged policymakers of all stripes to back “landmark” payday super reform, with new figures from the peak body revealing that businesses are significantly underpaying employees’ super entitlements.

The Australian Government announced its plans more than 18 months ago to reform the super payments scheme, which would require employers to pay super in line with the payment of employees’ wages. The existing law requires only that employers pay super at least once a quarter.

Under the law change, employers that fail to pay contributions in full and on time would be liable for the super guarantee charge.

The new regulations, should they be legislated, would come into force from July 2026.

The SMC argues that the change would ensure almost nine million Australians get their super paid earlier. As a result of a more frequent payment cycle, Australians would, on average, earn at least $7,700 more at retirement, the SMC calculates based on paid super contributions accruing and compounding sooner.

As well, the SMC argues that the reform would “strongly tackle” Australia’s $5 billion in a year unpaid super problem, avoiding the possibility of employers undercutting super payments.

The industry body representing the small business sector, COSBOA, has opposed the changes, arguing that payday contributions would have “dire consequences for small business owners and employers… significantly [increasing their] administrative burden”.

“Employers will be required to make up to 13 times as many payments, handle up to 13 times as many transactions, and ultimately incur up to 13 times the cost to ensure super reaches their employees accounts under this new arrangement,” said COSBOA chief executive Luke Achterstraat.

“This is an overwhelming ask, particularly for small businesses already struggling with tight margins,” he added.

The SMC countered that small businesses would in fact benefit from smoother cashflow management by following a payday cycle.

“Quarterly payments [create] large super liabilities and an administrative burden from time-consuming reconciliations, which can be prone to miscalculations leading to incorrect payments,” the SMC wrote.

With a federal election looming, the SMC has urged all parliamentarians to back the changes.

“Australian businesses and workers deserve the certainty of bipartisan support for landmark payday super reform,” the SMC said in a statement.

These reforms, it added, would serve as “a key tool to tackle Australia’s $5 billion a year unpaid super problem”.

“The reform has been announced for over 18 months, and stakeholder consultations have informed the design detail. While progress has been made, the reform is yet to secure formal bipartisan support.”

The SMC said the proposed reform has been backed by overwhelming public support, with nearly three in four (74%) Australians agreeing with the need for payday super, based on the results of a national survey conducted by the peak body last November. Just three per cent of participants said they were opposed to the reform.

SMC chief executive Misha Schubert said: “Paying super on payday will modernise the super system to stem underpayments for workers. This urgently needed reform will be fairer for both workers and employers.”

The calls by the SMC come as new data from the peak body show a significant number of Australians have missed out on entitled super payments. Over nine years the SMC calculates that Australians lost out on a total of $41.6 billion in unpaid super.

In the year between 2021 and 2022, it found that around 2.8 million Australians missed out on $5.1 billion in legal super entitlements.

Payday super payments are already delivered by a majority of SMEs, the peak body reports. As of 2020-21, more than half (56%) of small and medium businesses and one-third of microbusinesses already make super payments more frequently than quarterly.