Navigating technological challenges ahead of Payday Super

24 October 2024

| By Jessica Penny |

As new superannuation payment rules approach, a firm has underscored the need for funds to brace for significant technological adjustments.

With Payday Super coming into effect in July 2026, super funds will need to prepare for several technological challenges in adapting to this regulatory shift.

According to financial services partner Novigi, Treasury has outlined several changes to support the transition to Payday Super, all of which have data and technology impacts.

“This change is intended to improve retirement outcomes for Australians, in part by helping to reduce incidences of missing superannuation contributions and increase member balances,” Novigi said.

“However, the shift also introduces several technological challenges and opportunities for the super sector.”

One key change that funds will have to face is the reduced timeline for allocating and returning funds.

Currently, it can take anywhere between three to seven days for an employer contribution to be processed.

“However, once Payday Super comes into effect, contributions will need to be processed within three days,” Novigi said.

At the same time, the firm said that one of the biggest causes of delays is rectifying errors in employee data. Coupled with the increased frequency of transactions set to begin come July 2026, the risk of data inaccuracies is likely to rise significantly.

“To manage this, updates to SuperStream and its data and payments standards will be required,” it said.

Namely, the Albanese government has clarified that the SuperStream data and payment standards will be revised to allow payments made via the New Payments Platform (NPP) and improve error messaging to ensure employers and intermediaries can quickly address errors.

“One of the most important updates will be enabling payments via the NPP,” Novigi said.

“The benefits of integrating SuperStream with NPP extend beyond managing data errors – if implemented correctly, it could be instrumental in meeting the reduced timeline noted previously.”

Other key changes, according to the firm, include the ATO’s Small Business Superannuation Clearing House being retired from 1 July 2026, and employers now being able to show employees their existing “stapled” fund during onboarding, to reduce incidents of duplicate accounts.

Moreover, advertising of super products during onboarding will be limited to MySuper products that have passed the most recent performance test.

“Ultimately, the aim of Payday Super is to ensure that contributions are invested quicker, not just allocated to their super accounts. However, the technology that underpins the contribution and data associated with contributions needs to be carefully considered,” it said.

Novigi said that, as more information comes to light about how the government intends to support the transition to Payday Super, super funds need to consider whether their existing systems are ready for the increased volume and frequency of contributions.