Report highlights a shortfall in compulsory super payments

A new report highlights that workers were underpaid the superannuation due to them.

Worker on site not paid superannuation

A new report highlights that during 2013–14, more than 2.4 million workers were underpaid the superannuation due to them by their employers. Conducted by former Australian Treasury official Phil Gallagher, on behalf of Industry Super Australia (ISA), the report claims the shortfall amounts to an average underpayment of four months’ super, around $1489 for each affected employee.

It is compulsory for employers to contribute at least 9.5 per cent to the superannuation account of each worker who earns more than $450 a month. And yet, as shown by Gallagher’s report Overdue: Time for Action on Unpaid Super, which uses a sample of records for 2013–14 from the Australian Tax Office, workers were underpaid a total of $3.6 billion in just one year alone.

Gallagher warns that if the ATO and the Government do nothing, by 2024 the total in unpaid super could reach $66 billion.

It appears the main industry culprits are construction, mining, manufacturing and hospitality, with the shortfall in super payment largely affecting young and lower-income workers.

Recommendations of the ISA report are:

  • for further analysis of the industries that do not pay the full super guarantee;
  • the ending of the four-month payment ‘holiday’ between when super payment is shown on an employee’s payslip and when it is paid into a member’s fund;
  • closing the loophole that allows employers to count salary sacrifice amounts towards super guarantee obligations;
  • introducing real-time payments;
  • bringing in a mechanism for super funds to recover payments on behalf of members;
  • enforcing existing penalties for directors and employers who fail to meet their obligations.

Treasurer Scott Morrison said that employees should check that they are being paid the right amount of super by their employer, but he also acknowledged that the ATO would be looking further into the ISA report.

An inquiry has also been set up by the Senate to investigate these claims further and should be published in March 2017.

What do you think? Should the Super Guarantee Administration Act 1992 be amended to make it illegal for employers to count employee’s salary sacrifice towards their obligation to pay 9.5 per cent in super contribution? Could the existing penalties for employers who fail to meet their obligations be more strongly enforced?

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    To make a comment, please register or login
    6th Dec 2016
    they obviosly know who the cheats are.why doesnt someone in Govt do something about it.
    6th Dec 2016
    Yes, the cheats should be dealt with, but it is also the responsibility of the individual worker to know where (the fund, the option/s, the amount, etc) their contributions are going, and this should be provided by the employer at the onset of one's work. If this information is not forthcoming, again, it is an issue to be dealt with by the employee.
    6th Dec 2016
    It should be up to the Super company to keep their customers informed and up to date of all super accounts. They collect the money from the employer and charge us fees. It should be their duty to chase up the employer and report to the tax office.
    6th Dec 2016
    This is no surprise. Governments have been aware of it for decades and have done ZIP. AS is the case at all levels of government they only care when their re-election prospects are at risk or when they or their relatives have been affected.
    So why do people keep electing the same lemons from the same political parties? The answer to that says a lot about people, their intelligence and why the system never much changes.
    As I often say: we deserve the governments we get.
    6th Dec 2016
    The problem is that this government has deliberately reduced staffing level in the Tax Office and there is no one to follow this up. Employers know this and especially in small retail and hospitality deliberately do not make contributions. I live in regional Queensland where jobs are hard to find. Often employees know that super contributions are not being made but say nothing for fear of losing their job. This Government is pathetic in its lack of making businesses accountable
    6th Dec 2016
    Where is the rising star of the Libs? The employment minister was very vocal with the pursuit of trade union corruption, she is very silent on employer corruption. Come on Mickey do your job, getem girl.

    Cant understand some the reasons why employers find it difficult to transfer money into employees accounts, they have no problems transferring money into their own accounts.

    6th Dec 2016
    I have worked in a state tax assessing/collecting office and any employee can repay their salary ten fold by finding tax errors/omissions doing a normal day's work (if they want to), and yet they, as does the ATO, reduce employees to meet government budget restraints. There are a number of state and federal government departments which are like dogs chasing their own tails. Pathetic.
    6th Dec 2016
    Very simple. put super payments on the same footing as taxation payments to be paid simultaneously when tax is due with the same penalties for non compliance. Problem solved
    7th Dec 2016
    Trouble is - there is NO punishment. When super first commenced, and there was no choice for selecting a super fund, I lost thousands of dollars due to an employer not paying my super. Complaints to the tax office got no where. In the end I left the company. Now as I approach retirement, I could really have done with that money.

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