Unpaid super costs Aussies $28bn over six years

By Fergus Halliday

October 29 2021
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Australian workers are said to have lost $5 billion in unpaid super over the last year.

Dodgy business-owners are said to be taking advantage of Australia’s superannuation laws at the expense of employees’ retirement prospects.

A new report published by Industry Super Australia (ISA) has suggested that as much as a quarter of Australian workers may have been underpaid or unpaid when it comes to parts of their super.

The report said the culprit here is to be the lax enforcement of loose laws that allows employers to get away with paying super quarterly rather than whenever they pay an employee’s wages.

Their report warned that this behaviour can make it difficult for workers to keep track of their retirement savings and allow payments to fall through the cracks, leaving Aussies worse-off in the long run.

According to the industry body, underpaid and unpaid super costs almost 3 million Australian workers an average of $1,700 each year.

By the time retirement rolls around, this shortfall can see workers retire with up to $60,000 less in their super fund.

Industry Super Australia chief executive Bernie Dean said that as much as a quarter of Australia’s workers are losing out from an easy-to-fix problem that politicians are refusing to address.

“By not mandating the payment of super with wages, politicians are stopping millions getting what they are owed,” he said.

The ISA claimed that Australian employers have racked up a cumulative total of around $28.8 billion in unpaid super debt over the past six years.

Its analysis found that young workers and those on lower incomes were most likely to be affected, with underpayments particularly rampant among hospitality workers and “blue collar” tradies.

“Most employers are doing the right thing, but they are being undercut by competitors who are getting away with daylight robbery. Paying super with wages is the only way to get workers their money and level the playing field for business,” Mr Dean said.

On top of this, the ISA said that those that are affected are at a significant disadvantage when it comes to recovering their money.

Shortchanged workers are forced to rely on the Australian Taxation Office to reclaim underpaid money. However, the ISA noted that ATO only recovers around 12 per cent of unpaid super each year.

Pointing out that federal politicians have their super paid on payday, Mr Dean said that the retirement prospects of all Australian workers should be treated just as well.

“Our federal politicians get their super paid on payday, so should all Australian workers,” he said.

The ISA called on the federal government to mandate super be paid out at the same time as wages and to extend the Fair Entitlement Guarantee so that workers can recover their savings if a company collapses.

It also urged the ATO to lift its game when it comes to enforcement and to publicise those penalised for not paying super as a deterrent to others.

“Super is your money, you should get it paid at the same time you get your wages,” Mr Dean said.

About the author

Fergus Halliday

Fergus is a journalist for Momentum Media's nestegg and Smart Property Investment. He likes to write about money, markets, how innovation is changing the financial landscape and how younger consumers can achieve their goals in unpredictable times.

About the author

Fergus Halliday

Fergus is a journalist for Momentum Media's nestegg and Smart Property Investment. He likes to write about money, markets, how innovation is changing the financial landscape and how younger consumers can achieve their goals in unpredictable times.

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Retirement