If you’ve had to stop work due to injury or illness and have an accepted income protection claim, the question of whether payments/contributions will be made into your superannuation account on top of your income protection payments is answered by the terms of the insurance policy that you are paid by.
Some income protection policies include superannuation contributions on each monthly payment you receive in benefits, however, other policies do not include any superannuation contributions. Importantly, there is no overarching rule that the insurer must pay super on income protection monthly benefits.
What are superannuation contributions?
Most people who work are paid superannuation contributions by their employer, and the formal name of these payments is superannuation guarantee contributions (SGC). Aside from some exceptions, all employees must be paid these contributions, in addition to their ordinary salary or wage.
SG contributions have been increasing in recent years, and on 1 July 2025, the rate of the superannuation guarantee contributions will increase to 12% (from the previous 11.5%). No further increases are legislated at the moment. That means that your employer must make a contribution to your super fund, equating to 12% of your ordinary salary or wage (from 1/7/25).
If you stop working due to illness or injury and are no longer receiving your regular salary or wage, your employer will also probably stop paying you the superannuation contributions which it ordinarily must pay via the SGC scheme. This is because these contributions only have to be paid on the income that you are entitled to be paid by your employer.
When does the insurer need to pay superannuation contributions on my income protection payments?
If you are entitled to income protection payments, it’s because you have had to stop working due to illness or injury. The insurer’s obligation to pay you comes from the policy of insurance that exists between you and the insurer (or the insurer and the super fund, and you are one of the beneficiaries).
Importantly, you are not entitled to income protection payments (sometimes also called salary continuance) just because you are an employee. Rather, you will be entitled to the payments because the policy says that it must pay you. This, in turn, means that you are only entitled to super contributions on the payments if the policy also says that these contributions will be made under the policy.
In short, the wording of your income protection policy is crucial in determining what your payments will be and if superannuation contributions will also be made.
The good news is that many income protection insurance policies do provide payments into super, on top of the monthly benefits which it pays to people to help them meet their financial obligations after they cease work due to illness or injury.
If super contributions are to be paid along with your income protection payments, it is sometimes necessary that you keep the same superannuation account that provided you with the insurance cover when you were working, to remain eligible to receive the contributions.
Further, because super contributions paid by the insurer (rather than the employer) are not paid on income earned, super contributions made by your insurer will probably count towards your concessional contributions cap - this may have tax implications. It’s a good idea to speak with a financial adviser or accountant if you're unsure how this affects your situation.
How much will my super contributions be when I’m on income protection benefits?
Unlike for people who are working, there is no standard rule or requirement about how much superannuation your insurer must pay to you on top of your income protection benefit.
If there is a provision in the policy that super will be paid in addition to the monthly benefits, the payments may be paid at 10% or 15% of your pre-disability wage or the monthly benefit which you receive. However, the precise rate will depend on the terms of the insurance policy which is in place.
You can learn more about this in our earlier blog, “What is income protection and how do income protection claims work?”
Get help from a disability insurance lawyer
If you are receiving income protection insurance payments and are not sure if you should be receiving a super contribution on top of your monthly payments or are unsure if you are being paid the right amount or at the right rate, you should check the policy terms.
At Berrill & Watson, we can help you with checking your super entitlements on your monthly income protection benefits – there is no charge for this service.
Contacting Berrill & Watson
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