‘Payday super’ and what it means for you

The Federal Government recently announced that a key super reform will be implemented – payday super. This means employers will be required to pay superannuation to employees on payday rather than the current quarterly payment. 

This article outlines how payday super will benefit all Australians, in particular women.

The gender pay gap

The current gender pay gap in Australia is 13.3%, which represents the difference between average earnings for men and women. There are several reasons for this gap – including women’s disproportionate share of unpaid caring and domestic work, and female-dominant industries and jobs attracting lower pay – with no clear solutions in sight.

While people may be aware of the gender pay gap, many are less familiar with the superannuation gender gap. But unsurprisingly, given that super contributions are paid based on a proportion of income, a similarly large gap is created. It results in women retiring with about 30% less super than men, and one in three retiring with no super at all, according to the latest report from Industry Super Australia. 

This means that the promise of a dignified retirement becomes unachievable; poverty, inequality, homelessness and lack of economic security become a reality for many women in their retirement years. 

The advocacy group 'Women in Super' has identified five common reasons women have a significantly lower super balance than men: 

• lower rates of workforce participation 
• motherhood and caring responsibilities 
• superannuation inequalities (including not being paid super during parental leave) 
• taxation policy where tax concessions for superannuation favour high-income earners, and 
• the gender pay gap.

Advocating for policy reform

Many policy reforms have been advocated for to help solve this problem over the years particularly in relation to its impact on women.

Industry Super Australia has estimated about 1 million Australian women have lost more than $1.3 billion in super contributions owed in one year. Women employed in female-dominant industries like child and aged care, hospitality and personal services suffer super underpayments costing up to $40,000 from their retirement funds. 

Over a seven-year period, the estimates are a loss to women of an extraordinary $10.8 billion. As women get nearer to retirement age, the problem compounds as their super contributions are impacted by broken career patterns and the gender pay gap.

Many of these issues have amplified and worsened outcomes for many women's retirement savings, and the benefits of universal superannuation have not been fully realised. 

Payday super

The payday super reform is planned to be implemented in July 2026 to give employers sufficient time to prepare for the change. 

Being paid superannuation on payday rather than the current quarterly payment will eliminate the delay between payday and super contributions, which has aided dodgy or insolvent employers to avoid paying super at all and makes enforcement more difficult for the regulator.

The ATO will also receive more resources to help detect unpaid super payments earlier, with enhanced targets for the ATO to recover superannuation.

How payday super protects super insurance

In addition to tackling the super pay gap, payday super also further protects our insurance benefits in our super funds.

In instances where super is not paid at all or not paid in a timely way, a super fund member could find themselves in a situation where they have no insurance cover when they need it most. This might be because there are insufficient funds in their account, or their account has become inactive due to it not receiving contributions.

It’s extremely important for insurance in superannuation to be protected as it provides a safety for our retirement savings as well as a much-needed source of income if a worker becomes unexpectedly ill or injured and can no longer work. 

Staying on top of your super

Overall, it’s important that you are as well informed as you can be about your super fund and its contributions. In addition to checking pay slips (which may show contributions being made), it's essential to check the contributions are indeed making it into your super fund account.

It could be the difference between a dignified and comfortable retirement or, unfortunately, as many have found, particularly for women, economic insecurity and poverty in retirement years.