Super will be required to be paid on payday under reforms announced by the government which it claims will benefit both employers and employees.

However, the rule won’t commence until 1 July 2026 to give employers, super funds, payroll providers and other parts of the super system sufficient time to prepare for the change.

“This simple change will strengthen Australia’s superannuation system and help deliver a more dignified retirement to more Australian workers,” the government media release said.

“By switching to payday super, a 25-year-old median income earner currently receiving their super quarterly and wages fortnightly could be around $6,000 or 1.5 per cent better off at retirement.”

The government argued the change will make payroll management smoother with fewer liabilities for employers, while employees can more easily keep track of their payments.

The change is expected to particularly benefit those in lower paid, casual and insecure work who are more likely to miss out when super is paid less frequently. The government noted women are overrepresented in this group.

“While most employers do the right thing, the ATO estimates $3.4 billion worth of super went unpaid in 2019–20,” the government said.

“To further strengthen the system, the ATO will receive additional resourcing to help it detect unpaid super payments earlier and the government will set enhanced targets for the ATO for the recovery of payments.”

Treasury and the ATO will consult with industry and stakeholders on these changes in the second half of this year.

The move has been welcomed by Industry Super Australia, the Association of Superannuation Funds of Australia, the Australian Institute of Superannuation Trustees, Super Consumers Australia, and industry fund Rest in public media releases on Tuesday morning.