Big change to superannuation affecting millions of Aussies plus list reveals worst performing funds
Millions of Australians will be better off in retirement due to superannuation changes announced by federal Treasurer Jim Chalmers, as Australia's worst performing super funds are revealed. From July 1, 2026, employers will be required to pay super contributions at the same time as wages, meaning a 25-year-old on a median income would be about $6,000 better off when they retire. Currently, an employer is only obliged to make superannuation payments every three months. 'This simple change will strengthen Australia's superannuation system and help deliver a more dignified retirement to more Australian workers,' Dr Chalmers said. The change comes as it's revealed Australians have $10billion of their super invested in poorly performing funds, including with big name firms such as BT Funds Management and Energy Industries Superannuation. Dr Chalmers said the government's changes will also help businesses and reduce abuse of the system. 'More frequent super payments will make employers' payroll management smoother with fewer liabilities building up on their books,' he said. 'Payday super will also make it easier for employees to keep track of their payments, and harder for them to be exploited by disreputable employers.' In the most recently available figures, the Australian Taxation Office estimated $3.4billion of super went unpaid in the 2019-20 financial year. When the changes come in, the ATO will get extra resources to track down and recover unpaid super. Industry Super Australia (ISA), which has campaigned for payday super payments for years, claimed underpaid superannuation has cost workers $33billion in the past seven years alone. ISA chief executive Bernie Dean welcomed the changes, saying they would help ensure workers did not miss out on the payments they were owed. The latest change to the superannuation system follows the Albanese government cutting the tax concession on earnings from super balances in excess of $3million. The Association of Superannuation Funds of Australia (ASFA) also welcomed the government's announcement. 'Requiring employers to pay SG (Superannuation Guarantee) at the same time as wages will make it easier for employees to monitor the SG compliance of their employer and for the ATO to compare superannuation payments with wage payments,' said ASFA deputy CEO Glen McCrea. 'It will limit build-up of SG liabilities and hold employers to account.' Xavier OHalloran, director of Super Consumers Australia, said 'Not paying super on time can lead to real consumer harm. 'Currently, people miss out on months of investment returns and risk missing life insurance premiums when they fall due ... 'This will allow the ATO to take timely action to remind employers who have made a genuine mistake to pay, and take more serious action against employers who are engaging in wage theft.' Meanwhile, the Australian Prudential Regulation Authority (APRA) has revealed one in five 'choice' super products significantly underperformed its benchmarks. 'While the data shows some improvement in the performance of choice accumulation products, the fact remains that there are still far too many products delivering sub-standard investment returns,' APRA deputy chair Margaret Cole said. A choice accumulation product is one an employee picks for their employer to direct superannuation payment towards, rather than the employer opting into on the employee's behalf. The regulator found that super products closed to new members were more likely to underperform. Two-thirds of those products had 'poor or significantly poor performance' compared to the benchmarks - 28 per cent underperformed by up to 0.5 per cent, and 39 per cent by 0.5 per cent or more. Their fees were also higher, with members paying $225 for the average annual administration fee based on a $50,000 account balance. The comparable fee is $149 for open choice products and $137 for MySuper products. Cole urged members to shop around for better performing funds. APRA named 80 super options - different types of products, such as cautious or confident investments in cash, shares, bonds and property - that 'significantly underperformed' its benchmarks by more than 0.5 per cent per annum, on average, over eight years. This included products provided by BT Funds Management, Energy Industries Superannuation, OnePath, Equity Trustees, Colonial First State and MLC Super.