Unpaid superannuation continues to be blight on our social and economic system. In this article Industry Super Australia outlines the problem and what needs to be done.
Super is not a bonus. Super is money you have earned that is set aside to help provide you with stable and secure income in your retirement.
That’s why unpaid super – money wrongly withheld from employees by their employers – is a scourge that needs to be addressed. Each year about $5 billion goes unpaid.
Unfortunately, the ATO, the Government agency responsible for ensuring workers are paid their proper super entitlement currently only recovers about 15% of the unpaid superannuation owed to workers.
While the ATO has begun making some changes to its reporting approach, the fact remains less missing super is finding its way back into workers super accounts. The ATO’s latest annual report (2021-22) shows a 31 per cent decrease in the amount of unpaid super collected from non-compliant employers. This worrying result follows another decision to reduce the target amount of unpaid super the ATO recoups each year.
Clearly the system is not working – something has to change. The current system is built on outdated laws that mean employers only have to pay super four times a year. This makes it easy for employers to fall behind in their payments, hard for employees to track (even though super appears on your pay slip it doesn’t mean it’s been paid), and more difficult for the ATO to enforce and recover.
Originally quarterly payments were to facilitate paper-based payroll systems, but this excuse no longer exists. While most employers do pay super more frequently than quarterly, there needs to be an even playing field so all workers get the benefit of aligning the payment of super with wages. This would be the single most effective way to address unpaid super for workers – by preventing it in the first place.
In addition, ISA also recommends the following policies for fixing the problem:
- Enforcing stronger penalties for those who don’t pay super
- Extending the fair entitlements guarantee to cover super – this guarantee allows workers to claim lost entitlements when their employer become insolvent but currently doesn’t cover super
- Empowering third parties like the Fair Work Ombudsman and unions to assist the ATO in recovering unpaid super.
To read more about this issue and ISA’s proposed policy solutions, access our report here.
SHARE:
The scourge of unpaid super