Australia is set to overhaul its superannuation system with a long-anticipated reform aimed at ensuring contributions are paid more promptly and transparently. From 1 July 2026, employers will be legally required to deposit super within seven days of each payday.
The move, introduced by the Albanese Government, is designed to reduce the scale of unpaid super, a widespread issue that has disproportionately affected vulnerable and casual workers. The reform is expected to improve long-term retirement balances for millions of Australians, particularly those in low-income and insecure jobs.
Reform Targets Widespread Unpaid Super Problem
At present, Australian employers are only required to pay superannuation quarterly, a system that has often led to delayed or missed payments. According to data from the Australian Taxation Office (ATO), unpaid super totalled $5.2 billion in the most recent financial year, impacting roughly 3.3 million workers.
The new legislation mandates that super contributions must be received by the employee’s super fund within seven business days of their wage payment. If employers fail to meet this requirement, they will face the superannuation guarantee charge, which includes the shortfall amount, interest accrued daily, and additional enforcement penalties.
Treasurer Jim Chalmers, speaking in parliament, said the reform was aimed at closing a long-standing gap in the super system: “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.”
According to the Super Members Council, the average Australian worker could see an increase of $7,700 in retirement savings due to more frequent contributions. More broadly, the policy is expected to enhance the compounding effect of earlier payments, allowing balances to grow more efficiently over time.
Businesses Welcome Change, but Call for Caution
While the policy has been welcomed by unions, superannuation advocates, and many employees, several small business groups have raised concerns about the timeline and potential impact on cashflow.
Daniel McGowan, owner of a small café in Ipswich, told Yahoo Finance that although he supports the principle, the reform introduces financial pressure for small operators already dealing with tight margins. “I need to have that cashflow right here and now to put into the business to go straight into superannuation,” he said.
The Council of Small Business Organisations of Australia (COSBOA) has supported the policy in principle but is advocating for a phased implementation approach. They have warned that enforcing a strict seven-day rule from day one may put additional strain on businesses without adequate preparation time.
To ease the transition, the ATO has confirmed it will adopt a measured approach to enforcement during the first year, distinguishing between employers who are trying to comply and those wilfully ignoring the rules.
