One third of Australians short-changed on super, new report finds
Around 2.4 million or almost one third of Australian workers eligible for super are missing out on some or all of their entitlements, and little is being done about it, a new report reveals.
Under the Superannuation Guarantee (SG) employers must contribute 9.5 per cent into the super account of every worker over the age of 18 earning $450 a month.
But, using official ATO and ABS data, Industry Super Australia and Cbus have conservatively calculated that rogue employers are dodging compulsory superannuation payments to the tune of $3.6 billion a year (2013-2014). This equates to $1,489 or almost four months of super for the average worker affected.
Industry Super Australia chief executive, David Whiteley, says: “It is disturbing that nearly one third of workers eligible for SG are being short-changed”.
“The implications are wider than the individual. Today’s retirement income policies are made on the assumption that, into the future, we’ll all have super. As pension access tightens and home ownership declines, those missing out on compulsory super stand little chance of a decent standard of living in retirement,” said Whiteley.
While industry super funds chase unpaid superannuation, the report draws attention to wider inaction.
Cbus chairman Steve Bracks says: “We have stories of workers who’ve put faith in the system only to discover months later that their super, including extra voluntary contributions, has not been paid into their accounts and is lost completely when companies move into liquidation.”
“It is not unusual to hear from members who have lodged a complaint with the ATO still waiting for answers, let alone their money, years afterwards. One has told us he was advised recovery of unpaid super may take up to 10 to 20 years.
“Employers who do the right thing by their employees are competing on an uneven playing field against those who don’t,” said Bracks.
Whiteley says: “Questions must be asked about ATO resourcing to combat this problem along with an apparent failure to use individual taxpayer data to detect at-risk employees and employers”.
“SG reporting figures recommended by the National Audit Office and expected in the ATO’s 2015-16 Annual Report have also failed to appear”.
The joint Industry Super-Cbus report highlights little-known but serious system gaps. It recommends specific actions such as:
- Real-time payment, reporting and compliance of SG instead of the 25-year-old rules that allow employers to hold on to money for up to 4 months;
- Closing the loophole that allows employers to count salary sacrifice amounts towards the SG total;
- Greater resourcing for the ATO to recover unpaid SG;
- A clear, enforceable mechanism for super funds to recover unpaid super from employers on behalf of members;
- Retaining strong penalties against employers who fail to pay SG including personal liability for company directors.
A recent Productivity Commission report described unpaid SG as “one of the more egregious leakages in the superannuation system”.
Industry Super and Cbus are encouraging people who haven't been paid their super to contact their fund and to write to their local Member of Parliament.
Regional breakdowns of unpaid super are available on request.
To interview Industry Super chief executive David Whiteley, contact Phil Davey on 0414 867 188
To interview Cbus chairman Steve Bracks, contact Rod Masson on 0408 374 677
- 30 per cent (around 1/3) of all SG employees missed out on some or all of their super in 2013-14
- 2.4 million workers were affected, losing an average of $1489 or 3.8 months of their super
- Workers aged under 30 were more likely to miss out – 37% of 20-24 year-olds compared to 23% of 50-54 year-olds
- Workers in the construction, hospitality and cleaning industries, and low-income workers were more likely to miss out
- Currently employers have up to four months to pay SG while wages are typically paid fortnightly or monthly
- Small and medium-sized businesses were least likely to pay SG
- Businesses who don’t pay SG have an unfair advantage over those employers who do.
Industry Super Australia is a policy research and advocacy body representing 15 of Australia’s high performing industry superannuation funds, including Australian Super, CBUS, HESTA and HostPlus. Industry super funds deliver all profits to members and have more than $300 billion under management, invested on behalf of 5 million members – around half the Australian workforce.
Cbus is the industry superannuation fund for the construction, building and allied industries. Cbus is run only to benefit members and recently received recognition for its 10 years as a platinum rated fund by independent ratings agency SuperRatings.