Three super takeaways from the 2023 Budget 

The Budget confirmed changes to how super will be paid and taxed.

1. Continued funding for a superannuation consumer advocate

The Federal Budget included an allocation of $5 million over five years from 2023/24 to continue funding a superannuation consumer advocate. 

Super Consumers Australia intends to apply to receive this funding. Since its inception in 2018, CHOICE partner Super Consumers Australia has been advocating for the millions of Australians with super accounts and this funding would allow this good work to continue.

What has Super Consumers Australia achieved so far

Some of the most important work done by Super Consumers Australia since 2018 has included:

• Producing new retirement savings targets to answer the fundamental question of ‘How much do I need to retire?’. These numbers were based on the real spending behaviours of retired Australians rather than on industry self-interest.
• Persuading super funds to drop the ‘pandemic exclusion’ in their insurance products that could have seen them deny claims arising from COVID-19. 
• Identifying unfair terms in default super disability insurance which meant Australians who were out of work, caring, working part-time or casually, and those making mental health claims were paying for lower quality cover. Super Consumers Australia have highlighted how this ‘junk insurance‘ is out of line with community expectations and called on funds to remove these unfair terms.
• Pushing for important reforms to employee onboarding that curb the creation of costly duplicate super accounts. 
• Advocating for the retirement planning needs of low- and middle-income Australians as part of the Quality of Advice review.
• Working productively with the super industry to develop a ban on occupational exclusions in disability insurance in super. These exclusions make it almost impossible for people in certain jobs to successfully claim on their disability insurance.
• Supporting measures to make super fairer, including removing the $450 monthly threshold so more Australians on a low income get super and improving the visibility of super in family law proceedings so victim-survivors of family violence can get their share of super.
• Producing independent and high-quality research into consumers’ retirement needs, including a nationally representative annual survey.
• Publishing articles and explainers, including key investigations into financial advice provided by super funds, and employer onboarding practices.

What still needs to be done?

While Super Consumers Australia has delivered a lot of wins for consumers, the work of advocating for super consumers isn’t done.

Some priorities to improve the retirement system for all Australians include:

• Fixing insurance in super so that it works for all Australians. The aim is a system that provides financial support for anyone that becomes ill or injured and can no longer work.
• Reforming the onboarding system to make it easy for people to find, and stay in, a single high-performing super fund.
• Free and independent guidance service to help all Australians with their retirement planning.
• Ensuring families (particularly First Nations people) can access information on the super in deceased estates so they can fairly distribute that money when a loved one dies.
• Driving super funds to do more to protect their members’ retirement savings from scams and ID fraud.

From 1 July 2026, employers must pay their employees super at the same time they pay wages. Currently, employers only have to pay super quarterly.

2. Introducing compulsory payday super

Requiring employers to pay super at the same time as wages will help people retire with more.

From 1 July 2026, employers must pay their employees super at the same time they pay wages. Currently, employers only have to pay super quarterly.

This is a significant change for two reasons. Firstly, people will retire with more due to the compound interest earned from having money in their super accounts for longer. The Budget papers estimated around 8.9 million Australians will benefit from higher retirement income as a result of getting their super earlier and more frequently during their working life.

Budget documents estimated that a 25-year-old worker who is currently only paid four times a year would see her retirement income increase by up to 1.5%, or $6000, because employers will pay her super more often.

Unpaid super had disproportionately impacted younger Australians; in 2021/22, 48% of those who reported unpaid super were under 35.

Secondly, this change will make it easier to track unpaid super. The Australian Taxation Office (ATO) estimated there was $3.4 billion in unpaid super in the 2019/20 financial year.

Delayed super payments can make it harder for people to track if they’ve been paid all the super they’ve earned. Worse, a payment delay of months can mean that by the time people act to recover their unpaid super, their employer may have already gone insolvent. Real-time payment will make it easier for individuals to track non-payment of super and for the ATO to quickly identify employers who aren’t paying their employees’ super.

More than two-thirds of Australians agree that super should be paid alongside wages

Super Consumers Australia has been advocating for payday super for some time. Our national survey found that more than two-thirds of Australians agree that super should be paid alongside wages. 

The introduction of payday super will also help address the problem of people’s insurance being cancelled due to non-payment of insurance premiums. This situation can happen when a person doesn’t have sufficient funds to pay the premiums while they wait months for their super to be topped up. If a person’s insurance becomes inactive, their disability claim can be denied. Having no insurance could be devastating for someone who has lost the ability to work through illness or injury, or for someone relying on a family member for financial support who passes away. 

In a related measure, the Budget also provided $40.2 million to the ATO in the 2023/34 financial year to help it identify and act on cases of unpaid super.

3. Changes to how super accounts above $3 million will be taxed

Finally, the Budget formally introduced an expected change to how earnings on large super accounts will be taxed. These changes will apply from 1 July 2025. Australians with a super balance below $3 million won’t be affected.

The change will mean the concessional tax rate on earnings above $3 million will rise from 15% to 30%.

This reform aims to ensure generous superannuation concessions are better targeted. Super Consumers Australia says the change is a step towards a fairer retirement system.

This content was produced by Super Consumers Australia which is an independent, nonprofit consumer organisation partnering with CHOICE to advance and protect the interests of people in the Australian superannuation system.