Australians miss out on super entitlements

Almost one third of Australian workers, who are eligible for Superannuation Guarantee (SG), are missing out on some or all of their entitlements and little is being done about it, according to the Industry Super Australia (ISA) and Cbus.

Their joint report noted that some employers were ‘dodging compulsory superannuation payments' which amounted to $3.6 billion a year, according to the joint calculations by ISA and Cbus which were based on official data from the Australian Tax Office (ATO) and the Australian Bureau of Statistics (ABS).

This equated to $1,489 or an equivalent of almost four months of super for the average worker affected.

According to the study, workers aged under 30 were more likely to miss out, compared to the 50-54 year-olds group. In terms of the sectors, the most exposed to employers' misconduct were low-income workers across the construction, hospitality and cleaning industries.

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Also, small and medium-sized businesses were least likely to pay SG.

The report also stressed serious system gaps and offered 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 four 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; and
• Retaining strong penalties against employers who fail to pay SG including personal liability for company directors.

Cbus chairman, Steve Bracks, stressed that employers who ‘did the right thing' by their employees were competing on an uneven playing field against those who did not.

At the same time, ISA's chief executive, David Whiteley, said that it was disturbing that nearly one third of workers were being short-changed.

"The implications are wider than the individual," he said.

"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."

A recent Productivity Commission report described unpaid SG as "one of the more egregious leakages in the superannuation system".

Both ISA and Cbus said they were encouraging people who were affected by the unpaid super to contact their fund and write to their local Member of Parliament.