Unpaid super costing workers tens of thousands, new research finds

Posted: Wednesday 25 January, 2017

Workers on the cusp of retirement who are short changed on their superannuation entitlements have nest eggs that are tens of thousands of dollars less than those who are paid correctly, new research reveals.

Conducted by Industry Super Australia, the research comes ahead of the first hearing of a Senate inquiry into unpaid Superannuation Guarantee (SG) in Melbourne on Wednesday.

Using the latest ATO data from 2013-14, the research found that people aged 60 to 64 on salaries ranging from $50,000 to $75,000 who weren’t correctly paid their SG that year, had overall super balances that were $35,089 or almost 40 percent less than those who were.

Across all ages and all salaries, those Australians who were underpaid their super had balances that were $19,709 or 47 per cent lower than those who had received it.

Industry Super public affairs director, Matt Linden, said the research has big implications for policy makers and consumers alike.

“The disparity in super balances suggest that while unpaid SG is more likely to occur at a younger age, it persists over many years compounding with devastating later life effects,” said Linden.

“It’s unacceptable that some employers are deliberately dodging their super obligations but it is disturbing that compliance systems are allowing it to go unchecked year after year”.

“It leaves government short-changed on tax revenue and affected Australians with little chance of a decent retirement,” he said.

“The lower balances also mean retirees need to rely more on the age pension. The impacts are far reaching and the processes and enforcement around unpaid SG must be strengthened”.

Australian law requires employers to contribute 9.5 per cent in superannuation towards every worker over the age of 18 earning more than $450 (gross) a month. This is the Superannuation Guarantee.

But a joint Industry Super/Cbus report, released late last year, found that 2.4 million or one third of entitled workers were denied their SG in 2013-14. For the average worker this represented $1,489 or four months’ worth of savings.

This new work draws from an ATO 2% sample file of matched personal tax and superannuation records for 2013-14 and analyses the difference in balances for people who are underpaid employer super by nine categories of age and by six categories of wage and salary.  In the matrix of 54 combinations, underpaid super was associated with a markedly lower balance in all combinations. (Attached over)

The Senate inquiry hearing on unpaid SG starts 9am, Wed 25 January, Parliament House, Spring Street, East Melbourne. Industry Super Australia and the Australian Tax Office are appearing.

 

Matt Linden is available for interview

Media contact John Hill 0412 197 079

 

www.stopunpaidsuper.com

www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/SuperannuationGuarantee

Association between SG Underpayment in 2013-14 and Lower Superannuation Balances by Age and Wage

Table 1:Dollar differences in Balances between those Underpaid and Not Underpaid in 2013-14 by Age and Salary

 

2013-14 Salary and Wage as Recorded by the ATO

All

Age of SG Eligible Person

$1 up to $24,999

$25,000 up to $49,999

$50,000 up to $74,999

$75,000 up to $99,999

$100,000 up to $149,999

$150,000 and over

20 to 24

$1,648

$2,423

$3,062

$5,083

$8,761

$33,302

$2,876

25 to 29

$2,929

$4,203

$3,979

$5,605

$13,206

$21,972

$6,560

30 to 34

$1,894

$3,257

$6,533

$8,462

$16,888

$32,939

$11,046

35 to 39

$6,097

$5,446

$5,702

$14,966

$18,331

$38,050

$15,274

40 to 44

$8,006

$6,194

$11,825

$19,587

$31,307

$45,225

$20,281

45 to 49

$8,955

$9,465

$13,189

$30,773

$29,247

$74,959

$22,484

50 to 54

$15,755

$15,548

$20,536

$30,428

$34,137

$99,487

$25,551

55 to 59

$12,546

$21,763

$16,532

$35,490

$76,115

$235,932

$35,472

60 to 64

$4,665

$18,508

$35,089

$41,264

$39,640

$172,779

$23,857

All

$8,465

$10,266

$10,218

$18,787

$30,898

$78,246

$19,709

Note – Table is for people not making voluntary contributions in 2013-14. ISA Analysis of ATO 2% sample file

Table 2:Percentage difference in Balances between those Underpaid and Not Underpaid in 2013-14 by Age and Salary

 

2013-14 Salary and Wage as Recorded by the ATO

All

Age of SG Eligible Person

$1 up to $24,999

$25,000 up to $49,999

$50,000 up to $74,999

$75,000 up to $99,999

$100,000 up to $149,999

$150,000 and over

20 to 24

59%

33%

22%

26%

36%

114%

44%

25 to 29

40%

30%

17%

18%

35%

41%

38%

30 to 34

11%

13%

19%

18%

31%

49%

35%

35 to 39

25%

16%

11%

24%

23%

38%

32%

40 to 44

29%

15%

20%

24%

32%

33%

35%

45 to 49

27%

20%

18%

34%

22%

45%

32%

50 to 54

38%

29%

25%

28%

23%

46%

31%

55 to 59

23%

35%

16%

26%

48%

83%

39%

60 to 64

5%

26%

38%

29%

21%

49%

24%

All

44%

35%

20%

27%

34%

56%

47%

 

Note – Table is for people not making voluntary contributions in 2013-14. ISA analysis of ATO 2% sample file

 

Industry Super Australia provides policy, research and advocacy on behalf of 15 not-for-profit Industry SuperFunds who are the custodians of the retirement savings of five million Australians