Payday Super

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FOI 4112
Document 1

Australian Government
The Treasury
Ministerial Submission
MS25-000825

FOR ACTION - Payday Super - consultation outcomes and policy recommendations

TO: Treasurer - The Hon Jim Chalmers MP
CC: Assistant Treasurer and Minister for Financial Services - The Hon Dr Daniel Mulino MP

s 47C, s47E(d)

|  Signature | Date: / /2025  |
| --- | --- |

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Ministerial Submission | 1

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# KEY POINTS

- Following your agreement on 6 March 2025 (MS24-002443 refers), Treasury has consulted on exposure draft legislation for Payday Super. Submissions closed on 11 April 2025 with 166 written submissions, 6 industry roundtables, and 8 key stakeholder meetings.
- Widespread feedback was received across all impacted cohorts: Large and small business employers, digital service providers, employee advocates/unions, super fund trustees/administrators, clearing houses and onboarding services.

- While support is strong for the fundamental policy reform to align superannuation payments with wages, stakeholders across multiple sectors hold significant concerns with three key aspects of the policy:
- the proposed 1 July 2026 commencement date,
- the 7 calendar day ‘due date’ for contributions to be received by super funds, and
- the risk of employers facing penalties for delays or errors outside their control due to other parties in the transaction (employees, clearing houses or super funds).

s 47C, s47E(d)

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s 47C, s47E(d)

- Some stakeholders may claim businesses have had sufficient time to prepare given the headline reform has been public since the 2023-24 Budget. While it is true that businesses have had time to ready their cashflow management and resourcing to pay super more frequently, the readiness issues centre on the critical system infrastructure and upgrades required to process contributions effectively to meet the new obligations.
- Business overwhelmingly rely on digital service providers for this technology, and it is their implementation timeframes that are key (as detailed in Attachment A). Builds have not yet begun as design parameters are remain uncertain without finalised legislation.

- We also note some stakeholders (particularly superfunds) recommend maintaining the 1 July 2026 start date but adopting “transitional grace periods” or “phased implementation” to mitigate readiness concerns. s 47C

s 47C, s 47E(d)

## Further possibilities to improve adoption of onboarding reforms

- In addition to the core provisions, the draft payday super legislation will amend ‘stapling’ provisions to let employers retrieve stapled fund details and display them alongside an

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Ministerial Submission | 3

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employee’s choice of fund during onboarding, and introduce a prohibition on advertising non-MySuper products during employee onboarding.

- Some stakeholders have warned that there will be limited adoption of the stapling changes given they are not mandatory. The key barrier to adoption is the difficulty in generating an ‘employment link’ with the ATO (for fraud prevention) prior to requesting stapled fund details.

s 47C, s47E(d)

# Calls for additional ATO services and functionality

- Employers are strongly focussed on the expected experience of navigating Payday Super and managing their obligations via technology and business processes. Many claim that additional ATO-run services would mitigate concerns and provide a necessary baseline of Government support to businesses. Commonly requested services were:

- Data visualisation for employers, so that they can see the ‘data-matching’ the ATO is using to detect any suspected SG shortfall, seek correction of data they disagree with, and/or voluntarily disclose where they accept a shortfall exists, without waiting for the ATO to engage with them.

- An ATO-run account verification service, where employers can check that their employees’ fund/account information is correct (based on ATO-held fund reporting data) prior to making contributions, to prevent errors and rejections.

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A media campaign to raise broader awareness of Payday Super across the population, to ensure employers engage with the reforms and understand the changes they need to make before commencement.

- s 47E(d)
s 47E(d)
s 34(3)

s 47E(d)
s 47E(d)
s 34(3)

s 47E(d)
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s 47E(d)

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# Next steps

- Legislative finalisation is proceeding as soon as possible to introduce in the Spring sittings; legislation passage before the end of 2025 is required to maximise industry's implementation window, s 47C, s 47E(d)

s 47C, s47E(d)

|  Clearance Officer | Contact Officer  |
| --- | --- |
|  Brendan McKenna | s 22  |
|  Assistant Secretary | Director  |
|  Tax and Transfers Branch | Superannuation Access and Compliance Unit  |
|  s 47E(d) | Ph s 22  |

# CONSULTATION

ATO, DTA, Law Division, Department of Prime Minister and Cabinet

# ATTACHMENTS

s 47C, s47E(d)

B: Summary of consultation feedback
C: Additional ATO services recommended by stakeholders

s 47C, s47E(d)

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s 47C, s47E(d)

- Stakeholders across multiple sectors have expressed concerns about their ability to design, build and implement system changes and upgrades for Payday Super readiness. Changes are required across the superannuation ecosystem, encompassing:
- Digital service providers (DSPs), whose software platform provides contribution processing. This includes calculating/reporting contribution amounts, payment transaction handling, and preparing the SuperStream data that is transmitted to a fund to enable allocation to the employee’s account.
- Employers, who make the actual contributions and across the ecosystem are heavily depending on DSP software to do this. Employers are also responsible for offering their employees choice of fund and contributing to the correct fund in line with those rules.
- Clearing houses, to whom an employer may outsource their contribution handling responsibilities including the SuperStream obligations.
- Gateway operators, who manage the transaction network architecture and the flow of data between senders (employer/clearing houses) and receivers (super funds).
- Super funds, who receive and reconcile the payments and SuperStream data to allocate to members, and handle refunds and error messaging for contributions that cannot be allocated.

- Of these, DSPs and super funds are most at risk of being unable to complete implementation activities to be ‘Payday Super enabled’ by 1 July 2026. Key change activities these two stakeholder cohorts must deliver include the following:

|  DSP |   |   | Super fund  |   |   |
| --- | --- | --- | --- | --- | --- |
|  Mandatory |   |   | Mandatory  |   |   |
|  Core functionality changes to reflect new law | Infrastructure for increased volumes | Update to new SuperStream standards | Upgrade Fund Validation Service protocols | Infrastructure for increased volumes | Update to new SuperStream standards  |
|  Build Member Verification Request functionality | Implement new error treatment framework | Upgrade STP system to report OTE | Build Member Verification Request functionality | Implement new error treatment framework | Integrate NPP enabled payment solution  |
|  Develop support and guidance products | If providing onboarding: ad ban compliance changes |  |   |   |   |
|  Optional  |   |   |   |   |   |
|  Implement NPP enabled payment solution | Receipt date system to prefill voluntary disclosure | If providing onboarding: earlier stapled fund display  |   |   |   |

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s 47C, s47E(d)

- DSPs consistently indicate that their implementation timeline requires a minimum of 18 months from the point of legislative passage and finalisation of ATO technical specifications. They stress that:
- Their businesses (many of whom are multinationals building systems to comply with a variety of regulatory jurisdictions) will not commit funding to invest in system upgrades until there is legislative certainty.
- They are co-dependent on other stakeholders for the many build elements that focus on transmitting data between them; they need access to completed fund/gateway/ATO systems for ‘interoperability testing’ to ensure the upgraded systems communicate correctly.
- It will not be enough for them to finalise systems in time to deploy on the day the measure commences; they are responsible for instructing and guiding their employer clients on using the new systems to comply with their new obligations, which must occur prior to commencement.

- Some super funds have now indicated their implementation requires a minimum of 12 months from legislative passage. They argue that:
- The Best Financial Interests Duty means many trustees have determined that they will not invest in systems until legislative certainty, to limit the risk of sunk expenditure that is detrimental to member interests.
- While funds can be ready for the basic requirements to receive Payday Supercompliant contributions, the changes to uplift data quality and remediate contribution errors cannot be delivered in time for a 1 July 2026 start. Delayed deployment of these changes also jeopardises employers’ ability to comply, even if DSPs could be ready with their component of these functions.
- Funds will be mandated to adopt a New Payments Platform (NPP) solution, as employers/DSPs will be able to unilaterally decide to transact via NPP. The current immaturity of NPP adoption, and issues highlighted in the March 2025 RBA risk assessment, mean funds are reliant on fit-for-purpose NPP solutions entering the market between now and commencement, and being able to rapidly adopt them.

- Critically, system changes and new functions are required even for employers that already pay with a ‘payday cadence’, to reliably comply with Payday Super’s timeliness and responsiveness requirements.
- An employer may...