Qualified Automatic Contribution Arrangements (QACAs) in Australia: 2025 Guide

As Australia sharpens its focus on retirement readiness, Qualified Automatic Contribution Arrangements (QACAs) are fast becoming a cornerstone of workplace savings policy. While QACAs first gained global attention in the US retirement landscape, 2025 sees their principles increasingly influencing Australian superannuation strategies. With new compliance rules and a push to boost super balances, it’s crucial for employers and employees to understand what QACAs mean in the local context.

What Are Qualified Automatic Contribution Arrangements?

QACAs are workplace contribution systems designed to encourage higher retirement savings through automatic enrolment and stepped-up contribution rates. In essence, they make saving for retirement the default option, rather than leaving it up to individual choice. The key features of a QACA typically include:

• Automatic Enrolment: Employees are enrolled in a superannuation or retirement plan by default unless they actively opt out.
• Escalating Contributions: Contribution rates automatically increase each year up to a set maximum, unless the employee chooses otherwise.
• Employer Minimums: Employers must meet minimum matching or contribution requirements.
• Opt-Out Flexibility: Workers retain the right to reduce their contributions or leave the arrangement entirely.

While Australia’s superannuation system already mandates employer contributions, QACAs go a step further by making higher contributions the norm and leveraging inertia to drive better retirement outcomes.

2025 Policy Updates: QACAs and the Australian Superannuation Landscape

In 2025, the Australian Treasury has signaled a stronger alignment with QACA-style principles as part of its review of superannuation adequacy. Here are the headline changes impacting employers and employees this year:

• Default Escalation Policies: Several large super funds now offer automatic contribution escalation, nudging members to increase voluntary contributions by 0.5–1% annually.
• Employer Innovation: Major employers in finance, tech, and healthcare are piloting QACA-inspired schemes with higher default salary sacrifice rates for new hires—often set at 5–7% on top of the Super Guarantee (SG).
• Compliance Focus: The ATO has issued updated guidance requiring clearer communication to employees about their rights to opt out or adjust contribution rates under QACA-style arrangements.
• Gender Gap Initiatives: QACA models are being used to help close the gender super gap, with some employers offering higher default contributions for women returning from parental leave.

These developments reflect a broader policy goal: ensuring that Australians not only meet the minimum SG requirements but are also positioned to retire with greater financial security.

Real-World Examples: How QACAs Work in Practice

Consider the case of a large Melbourne-based healthcare employer that introduced a QACA-style program in early 2025. All new employees are automatically enrolled with a 6% salary sacrifice contribution, which increases by 0.5% each year up to a cap of 10%, unless the employee opts out or selects a different rate. The results so far:

• Employee participation in voluntary super contributions jumped from 30% to over 80%.
• The average super balance among new hires is projected to be 25% higher after 10 years compared to legacy employees who were not defaulted into QACAs.
• Opt-out rates remain low—less than 10%—demonstrating the power of inertia and default settings.

Super funds are also getting creative, with many now sending annual prompts to members about the benefits of increasing their contributions, and offering mobile app nudges to make opt-in and opt-out decisions seamless.

What Should Employers and Employees Do Next?

With QACA-style arrangements gaining momentum, both employers and employees need to be proactive:

• Employers: Review your super contribution policies. Ensure automatic escalation features are clearly explained, compliant, and genuinely in your workers’ best interests. Engage with your super fund provider about QACA best practices and communication strategies.
• Employees: Check your payslip and superannuation statement for new default contribution rates. Consider the long-term impact of sticking with higher automatic contributions versus opting out. Remember, the earlier and more you contribute, the bigger your retirement nest egg will be.

For those concerned about cash flow, most QACA arrangements allow easy adjustments—so you can find a savings rate that fits your life stage and financial goals.

Looking Ahead: The Future of QACAs in Australia

QACAs represent a significant shift in how Australia approaches retirement savings—making higher contributions the default rather than the exception. With ongoing policy support and evidence of better outcomes, expect more employers to jump on board and super funds to further innovate with digital tools and personalised nudges.

The bottom line: embracing QACA-style features could be the key to closing Australia’s retirement savings gap, helping workers of all ages and backgrounds enjoy greater financial security in the decades ahead.