ASFA calls for SG payments to be covered by the FEG

The Association of Superannuation Funds of Australia (ASFA) has recommended that unpaid Superannuation Guarantees (SG) be included in the Fair Entitlements Guarantee (FEG) so workers’ super payments are protected if an employer becomes insolvent.

Under the FEG, the Commonwealth was required to pay an ‘advance’ on certain unpaid ‘employment entitlements’, in cases where an individual’s employment ended in circumstances connected with the insolvency or bankruptcy of their employer.

However, the types of ‘employee entitlements’ currently covered by the FEG are limited and did not include unpaid superannuation contributions.

Related News:

In its pre-Budget submission, ASFA said there had been a number of recent high-profile cases including restaurant groups, where businesses had become insolvent and unable to pay their unpaid superannuation contributions.

“From the perspective of employees, unpaid compulsory superannuation contributions are equivalent to unpaid wages,” the association said.

“They are part of an employee’s remuneration and are vital for achieving dignity in retirement.”

According to the Australian Taxation Office (ATO), data from 2018-19 (the latest year for which data was available), there was about a $2.5 million shortfall in SG payments by employers.

The association estimated it would cost around $150 million per year to include unpaid SG in the FEG, with around 55,000 employees a year benefitting.

ASFA acknowledged that recent changes to superannuation reporting requirements for businesses and funds had given the ATO greater visibility into the issue and it was likely this issue would persist.

“In ASFA’s view, there is merit in reviewing the treatment of unpaid SG entitlements in insolvency/bankruptcy, with the objective of considering how to achieve the maximum possible recovery on behalf of affected employees,” it said.




Recommended for you

Author

Comments

Add new comment