Payday Super reforms: Priority actions for Australian super funds

The Australian Government has recently introduced Payday Super reforms, set to take effect from 1 July 2026, aimed at addressing the issue of unpaid superannuation and secure dignified retirement outcomes for working Australians. 

This article, the first in a series, highlights the key actions superannuation (super) funds should take. It focuses on considerations for super funds and the impact of Payday Super on their businesses, default employers, third-party providers and members.

Incoming reforms at a glance

The exposure draft consultation process commenced from 14 March 2025 and continues until 11 April 2025.

Some of the key changes include:

• Super Guarantee (SG) contributions: Employers must pay SG contributions, so that they reach super fund accounts within seven days of Qualified Earnings (QE) day (previously known as Payday).
• Revised SG Charge (SGC): Employers will be liable for a SGC if they have a SG shortfall for the relevant QE day or choice loadings for QE day (if an employer fails to comply with the choice of fund requirements).
• Faster processing: Super funds must allocate or return contributions within 3 business days, down from 20 days.
• Tax deductions: Under the new framework both on-time and late SG contributions will be tax deductible.
• Employee onboarding and transparency: Employers will be able to make a request for an employee’s ‘stapled’ fund details prior to or during choice of fund process.
• Advertising: Proposed new legislation prohibits advertising certain super products to an employee during the employee onboarding process.

Key considerations for super funds

The reforms aim to help working Australians save more for retirement through more frequent and earlier superannuation contributions, whilst also aiming to benefit employers by making payroll management smoother, and a simplifying the calculation of the SGC. 

The core change for super funds is handling more frequent and larger volumes of contributions and being able to allocate or return contributions faster. 

While the changes for super funds are relatively straight-forward on the surface, the Payday Super value chain reveals some complexities: 

1. The sequencing required across participants in this ecosystem
2. The impact of Payday Super on the processes of each participant
3. The downstream position of super funds across the value chain

These factors add a level of complexity for super funds as they navigate this change. 

Another important environment factor super funds should consider is the intended SuperStream modernisation. This involves the retiring of Bulk Electronic Clearing Systems (BECS) and adoption of New Payments Platform (NPP) by 2030 and is important for super funds to consider when addressing their approach to faster payment times (and associated data submissions) and therefore the appropriate modernisation intended as part of Payday Super.

The Payday Super value stream with SuperStream gateways

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As this shift unfolds, super funds must navigate a highly interconnected ecosystem where changes in one area can create ripple effects across compliance, operational processes, and technology integration. Effectively managing these dependencies will be essential to ensuring a seamless transition and maintaining system stability.

Assessing impact: The minimum review required

Many participants in the Payday Super ecosystem are also material service providers in super funds’ critical operations under APRA’s CPS 230. Viewing the Payday super reforms through an operational resilience lens is an effective mechanism for super funds to understand the high–level impact of Payday Super on their operations. 

The Payday Super value stream and impacted critical operations

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With CPS 230 emphasising operational risk, super funds need to evaluate the technology, processes, and cost implications involved in "money-in" operations to mitigate risks and ensure continuity as payment frequencies increase.

Five strategic considerations under Payday Super to enhance member retirement outcomes

Considering the potential impact across the Payday Super value chain, it will likely become increasingly difficult for super funds to operate without prioritising data quality, data utilisation, processing speed, straight-through processing, and real time payments.

Examining the potential impact across the value chain, we’ve highlighted five strategic considerations for super funds to explore. These considerations focus on strategic opportunities and ecosystem impacts under Payday Super, and importantly, how member retirement outcomes can be enhanced or supported.

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1. Strategic payments modernisation

With shorter contribution timelines, real-time payments are essential for compliance and efficiency. Firms must assess their ability to support the 7-calendar day SG rule and integrate real-time payments while managing technical, security, and data implications.

2. HRIS landscape

Employers will be evaluating their Human Resources Information System (HRIS) capabilities to better integrate payroll and SG commitments, creating operational efficiency under Payday Super. For super funds, assessing upstream system readiness (including onboarding and payroll processes, the role of digital service providers (DSPs), and clearing house integration) is essential to identify inefficiencies and mitigate potential disruptions. Ongoing consideration of the role and accountability of each participant as solutions develop is crucial, especially when service providers offer services to both employers and super funds.

3. Operational impact and uplift

The shift to Payday Super introduces significant operational changes, requiring super funds to assess their systems, processes, and capabilities to ensure compliance and resilience. As contribution payment and reconciliation processes become more frequent, funds must refine these functions with a stronger focus on data quality, validation, and automation to reduce errors, optimise exceptions processing and improve efficiency. 

Strengthening governance, cybersecurity, and risk management will also be essential to maintaining system integrity and preventing disruptions. Given the reliance on SuperStream Gateways and MSPs, aligning these dependencies with evolving regulatory and operational requirements will be critical. 

4. Employer value proposition

Payday Super offers super funds a valuable opportunity to enhance their employer value proposition by supporting their default or participating employers through the Payday super transition and beyond. 

The nature of this support can be wide ranging from adopting digital integration through employer portals, to developing onboarding or payroll system points of connection. 

By enhancing real-time data visibility and accuracy of contribution reporting, super funds can help reduce administrative burdens. 

Additionally, customised support models, including employer education modules, and financial wellbeing programs can strengthen employer relationships and improve outcomes under Payday Super reforms.  

5. Navigating regulatory constraints

When developing strategic solutions, it’s important to consider the complex and potentially restrictive regulatory superannuation environment, especially regarding data security and superannuation laws. Any new services should align with design guidelines that account for these factors, particularly considering Section 68A of the SIS Act, anti-hawking laws, and the sole purpose test. Strengthening data security, fraud prevention, and cyber risk management will be critical to support the move towards real-time payments. 

Immediate next steps for super funds

Payday Super reforms are intended to come into effect on 1 July 2026. By taking the following proactive steps now, super funds can better navigate complexities, mitigate risks, and seize opportunities as the changes take effect:

1. Consult: The exposure draft consultation concludes on 11 April 2025. Treasury is seeking feedback on the effectiveness of this exposure draft explanatory material in explaining the policy context and operation of the proposed new law. Super funds should consider if they will consult.  
2. High-level impact assessment of critical operations: Super funds should prioritise mapping their internal and external dependencies, as well as third-party integrations across contributions critical operations.
3. Define strategic approach: Super funds should assess how they want to address Payday Super reforms in line with their strategic goals and member outcomes. This will enable the creation of a clear roadmap for prioritising and implementing changes. Identifying high-level capital or operational expenditure to incorporate into annual business planning activities will also be critical.

At Baringa, we believe while Payday Super reforms present a significant operational change for employers, super funds and their associated service providers, they also present an opportunity to drive greater efficiency and represent a pivotal moment for payments modernisation across the entire sector. 

Reach out to Rhian Hughes to discuss Payday Super or any of the topics included in this article.