If you’re an Australian worker earning superannuation as part of your employment, there’s a major change coming that could have a significant impact on your superannuation retirement savings and insurance you have inside super.
From 1 July 2026, employers will be required to pay your superannuation contributions at the same time they pay your wages. This is the new “Payday Super” system. This replaces the current system where super can be paid as infrequently as once per quarter.
Payday Super expected to have a positive impact on your retirement savings
The introduction of the Payday Super system aims to increase your retirement savings.
Basically, contributions being made more frequently into your super fund will mean they can be invested sooner. That will, in turn, mean more time for your super money to earn compound interest and boost your retirement nest egg over time.
Other changes Payday Super should deliver
Greater transparency
You'll be able to monitor your super payments much more easily, especially if you’re paid weekly or fortnightly. This makes it easier to spot missing or late payments early by checking your online account or on your superannuation app.
Stronger protections
The Australian Taxation Office (ATO) estimates that employees lost over $5 billion in unpaid super in 2021–22. With Payday Super, it will be much harder for employers to delay or skip payments without detection.
Quicker allocation of your contributions into your account
Another change is that super fund administrators will now have just 3 business days (down from 20) to allocate your contributions to your account. That means you’ll see your super credited sooner than ever. Again, this will, in turn, improve the time available for compound interest to perform.
What you can do to prepare for Payday Super
- Check your payslips
Start regularly checking whether your super is being paid correctly and on time. You can do this through your payslip or by logging into your super fund’s portal.
- Talk to your employer or payroll team
Don’t hesitate to ask questions about how your super is paid and how your workplace will manage the upcoming changes.
- Update your details
Make sure your super fund has your current contact details so you don’t miss important notifications.
What impact will Payday Super have on your insurance inside super
In particular, for employees, Payday Super isn't just about seeing your retirement balance grow faster. It also has real-world impacts on insurance inside super, such as TPD and income protection.
Many Australians hold default insurance policies, such as Total and Permanent Disability (TPD) and income protection insurance, through their super funds. The premiums for this insurance are paid automatically from your super account.
With super being paid only quarterly under the current system, gaps in employer payments can lead to insufficient balances to pay the insurance premiums, which can result in:
- missed insurance premiums;
- lapsed or cancelled insurance cover;
- delayed TPD and/or income protection claims if something goes wrong.
This is because there are laws which super funds must follow to cancel your insurance if your account balance is less than $6,000 or if your account has been inactive for more than 16 months. Under Payday Super, with more frequent contributions, there is less risk of your super account falling below the balance needed to maintain insurance coverage or becoming inactive.
If your TPD or income protection insurance lapses because your super account couldn't cover the premiums (due to delayed or missing payments or low account balance), you might be uncovered at the time of illness, injury, or permanent disability.
It’s worth noting that claims on disability insurance cover are relative to the policy that was active at the time you stopped work due to injury or illness, not at the time you make a claim.
Consider this scenario
- You have TPD insurance through your super;
- You let it lapse in April 2024;
- You are injured and have to stop work due to that injury in June 2024;
- You subsequently reinstate your TPD insurance in July 2024 and lodge a TPD claim in August 2024;
- You will not be eligible for a TPD claim on that policy as you did not have insurance at the time you stopped work (June 2024).
It’s also the case that under many default insurance arrangements, you will get insurance cover automatically when you start with a new employer, but only if the first superannuation contribution from the new employer comes within 90 or 120 days of you starting with that new employer. If there is not a timely first contribution, the insurance cover may not start or may start with limitations.
With Payday Super, the risk of this happening is greatly reduced because contributions arrive with every wage payment, improving your fund’s ability to keep your cover active.
In summary
Insurance inside your super is often your first line of defence if you're unable to work due to illness or injury. Not only will Payday Super increase your super account balance, but it will also greatly reduce the risk that your cover disappears without you knowing it, helping you stay protected when it matters most.