Parliament passes half of Payday Super reforms — consumer protections left unfinished
Super Consumers Australia welcomes the passage of Payday Super legislation through Parliament, calling it a critical step toward ensuring workers are paid the super they’re owed, but warns that the Government has left a glaring gap in protections by failing to follow through on its commitment to fix the super onboarding process.
“Payday Super is a major win for consumers. It means you get your super when you get paid, not months or years later,” said Super Consumers Australia CEO Xavier O’Halloran.
“But this reform was meant to do more than stop payment delays. It was meant to stop people being influenced into creating duplicate accounts they never wanted, and that part has been dropped.”
The Government had proposed vital consumer protections alongside Payday Super, including:
- A ban on super fund advertising during the employee onboarding process
- Improvements to the onboarding process to inform employees if they already have a ‘stapled’ super fund.
These provisions were excluded from the final bill passed by Parliament.
“We now have a half-finished reform. People will get paid their super faster, but many will still be misled into creating multiple accounts, costing them tens of thousands in retirement income,” Mr O’Halloran said.
Treasury’s own modelling shows that without onboarding reform, super fund advertising during employment setup could lead to 325,000 duplicate accounts every year, draining $224 million in unnecessary fees and insurance premiums.
The ATO’s most recent statistics* show that 20% to 25% of working age people with super have more than one superannuation account.
“The original stapling reforms were supposed to stop this. But onboarding software is actively undermining stapling and this gap in consumer protections gives that behaviour a free pass,” Mr O’Halloran said.
“The Parliament just had the chance to clean up the ‘hot mess’ that is the super onboarding system. Instead, they stopped short and left millions of Australians exposed.”
Super Consumers Australia is calling on the Government to:
- Introduce a total ban on super fund advertising during onboarding,
- Make it mandatory for employers to notify employees of their stapled fund upfront,
- Overhaul onboarding software to comply with the intent of stapling legislation.
“This reform must be finished. Payday Super is the floor, not the ceiling, for a system that should protect people’s retirement savings, not exploit them” said Mr O’Halloran.