Payday super made compulsory from 2026, welcomed by industry

The Federal Government has confirmed that new measures will come into effect by 1 July 2026 to ensure Superannuation Guarantee (SG) contributions made by employers will be paid in accordance with pay cycles, instead of once a quarter.

The initiative has already been welcomed by several industry associations including the Super Members Council of Australia (SMC), the Association of Super Funds of Australia (ASFA), the Financial Services Council (FSC) the Australian Council of Trade Unions (ACTU) as much-needed and long-delayed especially to combat issues of unpaid and underpaid super and provide better investment outcomes.

According to Australian Taxation Office (ATO) data, unpaid super costs 2.8 million workers approximately $5.1 billion a year. The Super Members Council says this can leave the average worker with $30,000 less superannuation at retirement.

In an announcement made on Wednesday, Treasury said aligning payment of wages and SG contributions will “make it easier for employees to track their entitlements… [and] helps employers prove payroll management”.

“Payday super is a critical requirement for improving workers economic security in retirement. By aligning super payments with payday, workers will retire with thousands of dollars more in superannuation,” ACTU President, Michele O’Neil, said.

“When super is not paid regularly, the money is kept in employers’ accounts and that means workers lose large compound interest returns on their money.

“Payday super will put more super, more regularly, into more workers’ accounts and directly improve the retirement outcomes of all Australian workers. More regular employer super payments will give workers greater oversight over their money, reduce super theft and deliver higher compound interest returns for workers.”

The announcement follows an initial mention in the 2023-24 Federal Budget and the recent release of a report from the SMC urging the Government to address Australia’s “unpaid super scourge”, with SMC modelling suggesting the average worker would have $7,700 more in retirement savings with payday super due to returns accruing and compounding quicker.

“Paying super on payday will modernise the super system and should hugely reduce underpayments. It’s an excellent example of reform to benefit everyday Australians with super, and will strengthen fairness for both workers and employers,” Super Members Council CEO, Misha Schubert, said.

“Passing payday super into law this Parliamentary term is crucial to ensure millions of Australians who are currently being short-changed are paid their super on time and in full.”

“Unpaid super locks too many Australians out of the full transformative benefits of the retirement system and leaves people poorer when they retire. A unified push is needed to stamp it out.”

“We congratulate the Government on taking this important step towards legislating payday super. We stand ready to work with the Government, Parliament and other key stakeholders to enact these pivotal reforms and ensure Australia fixes the stubbornly persistent unpaid super problem.”

ASFA chief executive, Mary Delahunty, called the new measure a “game-changer” to rectify the hundreds of thousands of cases received per year related to underpayment and non-payment of superannuation

“This reform means workers will see their super build in real-time, alongside their wages. It will mean less lost super and better investment outcomes in preparation for retirement. We are sure that this change will encourage people to engage more regularly with their retirement savings,” she said.

“Most businesses do the right thing and pay super entitlements, but there are still far too many who are cheating their employees and the system, which hurts those workers in retirement. This reform directly addresses the issue of delayed or unpaid super, which disproportionately affects lower-income earners, casual workers, and women.

“It’s about fairness. Payday super makes it much more likely that Australians will receive the super contributions they’ve earned, paid on time, every time.”

The new legislation will also monitor the advertising of MySuper products that have passed the annual performance test as the ‘default’ option for advertisement during employee onboarding processes.

“Ensuring superannuation payments are made on payday will significantly increase Australians’ balances at retirement as the more frequent contributions will be subject to increased compounding returns,” CEO of the FSC, Blake Briggs, said.

“Informed consumer choice promotes competition in the superannuation system and delivers superior outcomes for consumers.

“The FSC commends the Government on reaching a sensible middle ground that facilitates competition between superannuation funds, encourages choice of fund, but also ensures people will only be shown products that have passed the annual performance test.”