Unpaid super debt climbs to $28.8b

Industry Super Australia (ISA) has called out politicians who it says are refusing to fix superannuation underpayments as its modelling shows more than a quarter of Australia’s workers have been ripped off $5 billion in super.

ISA’s report found almost three million workers lost on average $1,700 in super each year with those "dudded” on their super retiring with up to $60,000 less.

Its analysis of tax data showed young workers and those on lower incomes were most likely to be underpaid their super, and underpayments were rampant in blue collar trades and hospitality.  

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The report, titled ‘Super Scandalous: how to fix the $5 billion scourge of unpaid super’ found some dodgy employers had exploited lax enforcement and loose laws that allowed them to only pay super quarterly into the workers’ fund, despite what it said on a payslip.

The report’s key recommendation for fixing what it called an “unpaid super scourge” was to mandate all employers pay super into a workers’ account when they pay wages.

Not paying super with wages made it difficult for workers to keep track of their money and allowed payments to fall through the crack, said ISA.

“Federal politicians have known about this solution for years but have failed to act. MPs get super paid on payday and so should workers,” ISA said in a statement. 

“While Parliament has dithered, ISA analysis shows that, in the last six years, the cumulative unpaid super debt climbed to an eyewatering $28.8 billion. More will be lost unless our politicians act.

“Unpaid super creates an unequal playing field, as the majority of employers doing the right thing are undercut by competitors who are ripping their workers off.”

The report found that unscrupulous employers did not fear the regulator.

“With good reason, the Australian Tax Office only recovers a dismal 12% of unpaid super annually, rarely issuing maximum penalties or publicising the little enforcement activity it does carry out,” the ISA said.

“If the ATO is unwilling or unable to recover workers’ savings the law should be changed so that employees, the Fair Work Ombudsman, and others acting on behalf of workers can.”

ISA’s analysis of the most recent 2018-19 ATO tax file data found:

  • Almost 1.7 million men and 1.3 million women had been underpaid super.
  • Men lost $3.4 billion and women $1.6 billion.
  • A third of workers under 30 – about 890,000 – had been underpaid.
  • Half of those earning less than $25,000 missed super payments and 30% of those earning between $25,000 and $50,000 were underpaid.
  • About 40% of blue-collar workers (machinery operators and drivers, labourers, technician and trade workers) have been underpaid super. 

ISA called for politicians to:

  • Mandate super payment at the same time as wages.
  • Lift enforcement activity and force the ATO to issue and publicise penalties for not paying super – so ‘dodgy’ employers can see there is a cop on the beat.
  • Empower employees and representatives to recover unpaid super debts.
  • Extend the Fair Entitlement Guarantee so workers can recoup their savings in a company goes bust – at the moment super is not included.

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