New super payday rules: Are you better off and how big will employer fines be?
Getting your super paid on payday will make a difference to your retirement. But you should look at your fund's fees and performance too.
The federal government's new super reforms will require employers to pay employee's super at the same time as their salary gets paid.
If the employer misses this date, they have 7 days to make sure the super contribution gets paid. After this, late employers will have to pay a super guarantee charge.
The reforms won't come into effect until 1 July 2026.
How will this reform benefit workers?
If your employer currently pays your super at payday you won't benefit from this reform because you're already getting it paid promptly.
But under the current rules, employers only have to pay super at least quarterly. This means a full-time worker who gets paid fortnightly or monthly won't get their employer's super contributions in their fund until weeks or months later.
Time is money, especially with an investment. Getting your super paid more frequently will boost your overall retirement savings.
In an announcement from the federal treasurer the estimated benefit for a 25‑year‑old median income earner would be $6,000, or an increase of 1.5%. That's if their employer switched from making quarterly to fortnightly contributions under the new rules.
Employers who don't pay super on time under the new rules will have to pay a daily interest charge at a rate of 11.36%, on a compounding basis. And there will also be an administrative charge of 60% of the shortfall.
Everyone should look at their super anyway
Australians tend to forget about their super. A recent Finder survey found that only 1 in 10 Australians know how their super fund performed in the last 12 months.
Doing a quick health check on your current super situation is always a good idea.
- Log onto your ATO account via MyGov and check your super fund(s). If you have multiple funds consider rolling them into one immediately. Multiple funds means you're paying more fees and diluting the growth potential of your super.
- Review your fund's performance. Compare your super fund to others on the market and make sure yours is bringing you a better than average return. If not, time to switch.
- Don't forget to compare fees. Super fees eat into your retirement wealth. While you can't avoid fees entirely it's a great idea to look for a fund with more competitive fees.
- Check your life insurance cover within super. You might not even know you have life insurance cover in your super fund. You're paying for it, so check it's the right cover for you and decide if you really need it or not.
Check out some of the market's best super funds, according to the Finder Awards.