Labor's new legislation to require employers to pay their employees' super at the same time as their salary and wages has passed Parliament.
This will benefit the retirement incomes of millions of Australians.
These laws are all about reforming our superannuation system to help ensure more Australians get the secure retirement they need and deserve.
The Albanese Government is ensuring more Australians earn more, keep more of what they earn and retire with more too.
From the 1st of July next year, employers will be required to deposit their employees' super into accounts within seven business days of payday.
This will strengthen Australia's superannuation system and help deliver a more secure retirement to more Australian workers.
Employees will benefit from more frequent and earlier super contributions that will grow and compound over their working life.
For the average 25-year-old worker's retirement balance, this is the equivalent of receiving an extra $6,000 in today's dollars.
If a worker is missing out on their super the impact is even more significant.
In a typical unpaid super case for a 35-year-old, recovering their super leaves their retirement balance more than $30,000 better off in today's dollars.
While most employers do the right thing, the Australian Taxation Office estimates $6.25 billion worth of super went unpaid on the most recent financial year data.
This issue disproportionately affects more vulnerable Australians and women. That's because those on lower paid, casual and insecure work - who are more likely to be women - are most at risk of missing out on their super.
The new law will:
- Require employers to ensure super contributions are received by the employee's fund within seven business days of payday, or they will be liable for the superannuation guarantee charge.
- Help the Australian Taxation Office enforce the law and more quickly identify employers not making contributions.
- Redesign the superannuation guarantee charge to be fit for purpose and make Payday Super work.
The ATO is consulting on its approach to compliance for the 12 months after the change starts. The ATO's approach will differentiate between low and high-risk employers.
This approach will mean that employers who are making the effort to pay contributions in line with each pay cycle can fall into the low-risk category.
We thank the unions, industry, businesses and the broader community for their feedback, engagement and views on this legislation.
Delivering payday super for Australian workers builds on our historic reforms to pay super on government paid parental leave, making our super system fairer from top to bottom, our boost to the Low Income Super Tax Offset, and Labor's 12 per cent super guarantee.
