6 October 2014
Super failure: Every year, $2.5 billion worth of missing superannuation owed to workers
New research commissioned by Cbus, AustralianSuper and REST has found that the non-payment of super by employers affects around 650,000 Australian workers, leaving them collectively out of pocket almost $2.5 billion annually.
Conducted by the research house Tria Partners, the research found that the average person affected loses around $3,750 per annum in superannuation, or around 9 months’ worth of super for someone on average weekly earnings.
The loss of super impacts more heavily on younger and lower-income Australians. For a 25 year old, a one-off loss of this magnitude could equate to a loss of $13,500 at retirement in today’s dollars. Those in more vulnerable circumstances, industries or employment modes may endure multiple losses throughout their working life.
The Association of Superannuation Funds of Australia (ASFA) CEO Ms Pauline Vamos says the research shows why it is so important for people to be engaged with their super and check their accounts frequently.
“By law, your employer is required to pay 9.5 per cent of your salary into your superannuation account, and at least quarterly. The deadline for the next quarterly payment is October 28, so if you have any doubts about whether or not your super is being paid correctly, contact your fund in early November, who will be able to let you know the timing and amount of your recent super payments.”
“If a payment is missing, then speak to your employer about it and, if necessary, notify the Australian Tax Office (ATO), which will be able to chase it up on your behalf, if you are unable to resolve the issue with your employer.
Ms Vamos said the onus is also on employers to make sure they are paying their super on time, and correctly.
“We know that the world of super can be challenging for many employers to navigate, however it’s their legal obligation to make sure they are paying their employee’s superannuation correctly. If they don’t, then large penalties can apply.
“If employers are unsure about how much, where or when to pay their super obligations, they should contact their default fund or check out the ATO website for a wealth of information about paying superannuation, including tools they can use to calculate their superannuation obligations.”
ASFA’s Super Guru website has information for employers on how to make sure they meet their superannuation obligations. There is also other information on the site for employers and Australians of all ages and stages of their life.
CEO of Cbus, the largest fund for the construction and building industry, Mr David Atkin said that the construction industry was massively over-represented in the research results on non-compliance.
“Workers in the construction industry are especially vulnerable to the loss of their superannuation,” Mr Atkin said.
“This issue not only impacts on individual workers’ retirement savings, it undermines the majority of employers who are doing the right thing in a highly competitive bidding process for work.
“Employers failing in their superannuation payment obligation is also especially dangerous in construction given the level of entries and exits of business in the industry.”
Mr Atkin said the research clearly showed that more needed to be done to protect employees’ superannuation in the event of non-compliance.
“At present, too many employees are unaware of non-payment, and those who do complain to the ATO usually do so too long after the event.
“That’s why, in the construction and building industry, Cbus contracts with employers to pay their employees superannuation monthly. This provides early warning allowing the Fund, employers and employees to take action to remedy the problem.”
Ms Vamos said that the research should also prompt policymakers and regulators into action.
“There are a number of steps that can and should be immediately implemented including better resourcing of the ATO in this area and better communication flow between regulators and funds to ensure Australians are receiving their legal entitlements. A good first step would be a greater level of information sharing between industry and the ATO in order to pro-actively chase up superannuation payments,” Ms Vamos said.
For further information, please contact:
Lisa Chikarovski: Manager – Consumer Strategy, Media and Public Affairs, 0451 949 300.
ASFA is the peak policy, research and advocacy body for Australia’s superannuation industry. It is a not-for-profit, sector-neutral, and non-party political national organisation, which aims to advance effective retirement outcomes for members of funds through research, advocacy and the development of policy and industry best practice.