Rogue employers avoided $4.3 billion in superannuation payments to 2.8 million Australians in 2019-2020, the most recent year that figures have been available.
Over seven years, unpaid super has topped $33 billion.
The Australian Taxation Office only recovers 15 per cent of that total, according to research from Industry Super Australia (ISA).
The ATO recovery rate is “a scandal”, Rainmaker research director Alex Dunnin said.
“If that figure is correct it’s outrageous, and it shows the system is not taking this stuff seriously,” Mr Dunnin said.
ISA has called for a number of reforms to turn the situation around.
ISA CEO Bernie Dean said: “Each year Australian workers are missing out on billions in super they are legally entitled to, and that means a less secure future for them and their families.”
The government needed to take the opportunity of the upcoming budget “by mandating that employers pay super at the same time as they pay wages: It’s the right thing to do and it’s affordable”, Mr Dean said.
Employers are required to pay superannuation every three months, while wages are paid weekly or fortnightly.
That lack of co-ordination between the two makes it hard for the ATO to follow up underpayment, an Auditor-General’s report found earlier this year.
“If someone reports that they haven’t been paid their super for two months, then the ATO still has to wait another month to follow it up,” ISA communications spokesperson James Dowling said.
As the chart above shows, super non-payment has declined a little in the latest year for which figures are available – 2019-20 – but still remains above $4 billion a year, despite crackdowns and publicity on the issue.
Cracking down on super non- or underpayment is not always easy because many of the employers guilty of the practice are small businesses, independent economist Nicki Hutley said.
Small business employees lack power
“You can regulate a lot of things, but policing and ensuring compliance are tricky and can be expensive,” Ms Hutley said.
“Even if you mandated super be paid at the same time as wages they are being paid into different accounts.”
Employees in small businesses can find it more difficult to demand their rights than those in big companies, which are more likely to have correct practices in place and are wary of reputational damage from underpayment of benefits.
“People in that position [in small businesses] often feel they don’t have the power to go to their employer to raise the fact they are not being paid super,” Ms Hutley said.
ISA also called for the payment of superannuation on paid parental leave which the federal government has said they favour, but have other financial commitments that need to be addressed first.
Ms Hutley said paying super on parental leave was vital.
“It’s absolutely an important part in helping to close the gap [between men and women in super],” she said.
Super for unpaid leave
Super should also be paid on unpaid parental leave.
“It will be paid on 18 or 26 weeks of parental leave that people are entitled to, but if you take six months off in unpaid leave then super should be paid on that, as well.”
Such measures could be shared between the government and employers, she said.
ISA also called for superannuation performance measures to be tightened to ensure workers were not stuck in underperforming funds for long periods of time.
The legislation demands that performance tests go back eight years from 2024 but this should be extended to 10 years, and the measure should be applied to all super products and fees, ISA said.
Superannuation should be covered by the Fair Entitlements Guarantee, which would allow insolvency administrators to chase it up in the way they do now with wages in corporate insolvencies, according to ISA.
That measure was strongly supported by Mr Dunnin.
“Superannuation debts should be transparent, accountable and chaseable in insolvencies and it would be mean-spirited not to accept that,” he said.
ISA said super non-payment hits low-income earners and women the hardest.
The measures called for would help reduce current inequality in the super system, ISA stated.
“Too many women are at risk of retiring into poverty, and the typical woman retires with about a third less super than men.”
The New Daily is owned by Industry Super Holdings
