Is your future being stolen?

Research suggests $44 billion in retirement savings could be lost over the next 10 years.

Is your future being stolen?

New research released yesterday by industry super fund Cbus suggests that $44 billion in retirement savings could be lost over the next 10 years due to non-compliance with superannuation laws. More than 690,000 Australians are expected to be affected by the non-payment of superannuation entitlements over this time period.

The findings suggest that a more rigorous enforcement and tougher penalties need to be legislated in order to tackle the problem more effectively.

“Non-payment of superannuation contributions has a big impact on employees with lost retirement savings today having a compounding effect magnifying the losses over time,” said Cbus CEO David Atkin. “These findings highlight the need for Government, the industry and the Australian Tax Office to step up compliance activities to ensure these obligations are being met.”

Key findings from the report include:

  • at current growth rates, total losses to the superannuation system resulting from superannuation guarantee (SG) non-compliance will be $44b over the ten years to 2023
  • construction is the most affected industry; other industries with elevated non-compliance include property services, mining, hospitality and manufacturing
  • estimated non-compliance with SG obligations costs employees – $2.6 billion per year, or 4.4 per cent of total SG contributions.

For more information read the Superannuation Guarantee non-compliance report

Read more from www.cbussuper.com.au

Opinion: Tougher penalties required

The report released by Cbus paints an unsettling picture of Australian employers, with a minority failing to pay workers what they are owed for a hard day’s work. Under recent legislative changes by the Government, the penalties imposed on employers who fail to make contributions on behalf of their employees have been reduced.

Small losses in superannuation contributions today have a huge effect on the retirement savings of any employee, taking into account the compounding effect of these contributions over time.

At the end of the day, it is the Government and the taxpayers who will be expected to foot the bill for this lost superannuation in five, 10 or 20 years from now when these employees retire with insufficient savings to see out their life comfortably and who, as a result, will most likely rely on a pension.

Failing to pay the superannuation entitlements of an employee equates to theft and any employer caught doing so should be severely penalised to prevent it ever happening again and to send a message to the industry.

What do you think? Is it really that surprising that there are companies failing to pay their employees’ entitlements? What is an acceptable punishment for a company found to be in breach of these rules? Have you, or members of your family or friends, been victim of an employer failing to make SG contributions?





    COMMENTS

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    Tobs
    17th Nov 2015
    10:16am
    Well done CBUS . Shame on the government - looking after big business rather than individuals .
    Grumpy
    17th Nov 2015
    3:11pm
    Tobs, you are looking in the wrong place. Worst offenders are small business whose accounts are generally not audited, and who are closer to insolvency.
    MICK
    17th Nov 2015
    10:51am
    We need to make the payment of superannuation MANDATORY, not optional. The crooks always work out what they can get away with and whether there is a resolve to stop crooked behaviour. Sadly Australia has a record of crooks thriving because our system of government refuses to act when a problem arises.
    The Laws we need are confiscation of assets law and/or jail time. If you did that ALL employers would do the right things. Problem solved. But don't hold your breath.
    Adrianus
    17th Nov 2015
    8:58pm
    mick, the 'G' in SGC is for Guarantee. We have enough laws in the country, what we need is a judicial system to uphold them and a police force to enforce them. How many unlicensed people in Victoria are changing their own light bulbs?
    Oldman Roo
    17th Nov 2015
    9:55pm
    Mick , you are 100 % right . I have learned the hard way , years ago , just what the owners of a small business get up to , especially when they can use their discretion or intimidate you and you have not many options because you do not want to lose your job . While it may no longer be quite that easy in these days , no doubt , the attitude with many of them would not have changed .
    Fred
    17th Nov 2015
    11:02am
    Tobs why do you jump to the conclusion that it is Big business doing the wrong thing it is just a likely to be a small business employing 4 or 5 people or even less doing the wrong thing.
    Grumpy
    17th Nov 2015
    3:20pm
    Tobs might also like to consider the "robbery" of lower SGC contributions because small business employers deliberately use wrong award classifications to keep pay down.
    I have seen this and experienced it. The government would have you believe only a small number of renegade businesses do this. My observations are that in regional Australia it is rampant among small businesses.
    Adrianus
    17th Nov 2015
    11:26am
    Scrap the monthly minimum and the quarterly reporting. At the risk of adding to business operating costs it is now imperative that Super Guarantee Contributions be made on pay day. We are still operating with rules which were introduced before EFT was possible. For God's sake is there nobody in the ATO with anything between their ears?
    Recently a friend asked me to chase missing contributions and after two months of communication with the employer and getting minimal success, I decided to contact the ATO. They responded to my email after 4 weeks. Here is an abridged version of the ATO response,
    Thank you for telling us.
    We will keep you up to date.
    The best possible outcome is that you will receive your pay within a year.
    Unfortunately some investigations may take many years and there are times when we cannot recover unpaid super.
    Grrrhhh!!!
    Anonymous
    17th Nov 2015
    11:36am
    You where lucky to get a reply within 4 weeks Frank I have deal't with this industry at times and it is generally the small companies employing only a few people who are struggling cash poor and the last thing they pay is your superanuation.I can tell you that nothing you do will make them pay up threats of fines etc won't alter anything as the employers have no interest in paying.
    Adrianus
    17th Nov 2015
    12:54pm
    The rules direct the employer to include the amount on the payslip but not pay it for 3 months? This idea was originally introduced to ease the workload on the ATO.
    When small businesses are doing it tough those postponed expenses become a huge burden. Adding a hefty fine, in many cases I would imagine is superfluous.
    If the SGC is to continue it must be managed better.
    Small business owners in particular must be managed differently. It's not much use to anyone if a reporting mechanism is not factual. Under this current system an employee may not be aware they haven't been paid for 6 months or more!
    KSS
    17th Nov 2015
    1:01pm
    Frank and even when the employee receives their super statement from their fund, how many actually look at it at all never mind in detail?
    Adrianus
    17th Nov 2015
    2:27pm
    Yes, just as a small minority of employers don't see the urgency to make the contributions in my experience many members do not reconcile their super statement.
    According to the report only a small proportion of employers fail to meet their obligation due to insolvency. This is a very poor indictment on Union Super Funds and the ATO.
    Grumpy
    17th Nov 2015
    3:21pm
    Was the delayed reporting & payment really to assist ATO workload, or was it to ease cash flow pressure on business?
    Tom Tank
    17th Nov 2015
    11:44am
    Payment of Superannuation is mandatory BUT it is not policed. The ATO are supposed to look after that but with the cut backs imposed by the last government (Abbotts) the already overstretched ATO just do not have the resources.
    My wife was robbed by her employer, in the aged care sector, who declared bankruptcy having spent government funds on her hobby without making the compulsory payments of super into her employees accounts.
    The ATO will apparently make some restitution but we are not holding our breath as it has been some years now.
    You may recall the taxpayer funded John Howard's brother's superannuation liabilities when his business went broke. Doesn't apply to the rest of us unfortunately.
    Sundays
    17th Nov 2015
    2:03pm
    Yes, it s a major problem and employers know that due to the decimation of the ATO workforce, there is minimal policing. It's as if the Govt doesn't care because while many employers do the right thing, others will always screw down their employees.
    Adrianus
    17th Nov 2015
    2:49pm
    Is "Fair Work" also undermanned and overstretched? Because they play a straight bat on this question. They don't seem to care that employees are underpaid anymore.

    Sundays, the ATO is not that decimated that they wont chase me for some tax.
    Sundays
    18th Nov 2015
    9:03am
    They have had a drain of skills with the loss of nearly 4,000 staff. Of course they'll chase the little people, but unable to tackle the compliance issues apparently. I've had dealings with Fair Work and it seems you have to do all the work! Bit like Fair Trading.
    Ahjay
    17th Nov 2015
    11:52am
    It is not just the employers,the government wants us to work on past retirement age but will not allow the employers to pay into super once you turn 75. This means you are required to work at a 9.5% discount to the rest of the workforce. Some incentive huh!
    Age discrimination perhaps?

    Another thing, as our life spans increase,why is the minimum draw down designed so your super account will run out at around 104 years. This leaves you broke when you are most vulnerable. Some reward for getting old I suppose.
    KSS
    17th Nov 2015
    12:23pm
    Given that superannuation payments are part of the salary package for the employee, if it is not paid to super accounts it should be paid directly to the employee as salary surely!

    17th Nov 2015
    12:07pm
    "Both have the same job, the same wage, and both have had their super stolen."
    KSS
    17th Nov 2015
    12:26pm
    "•construction is the most affected industry; other industries with elevated non-compliance include property services, mining, hospitality and manufacturing"

    Notice how the worst offenders are those industries with the strongest unions? What are the unions doing about it? CMFEU? Why aren't they standing up for their members?
    Adrianus
    17th Nov 2015
    1:02pm
    It is interesting how those strong unions have become more politically outspoken as their membership drops off. Only 12% of private sector workers are now members of a union.
    Grumpy
    17th Nov 2015
    3:16pm
    KSS, blatant offenders numerous in hospitality renowned as having one of the weakest unions.
    Anonymous
    17th Nov 2015
    3:42pm
    Yes that's correct Grumpy a couple of names come to light of people who have run this union one being a Craig Thompson and another being Kathy Jackson whose main aim was to pinch as much money from the members as possible and they all had great success at what they did and are both living a lives of LUXURY.
    (two scumbags)
    Grumpy
    17th Nov 2015
    5:05pm
    robbo, while noting your sentiments which are fully justified, I think you will find the offenders you cite were in fact Helath worker union officlals, not hospitality.
    My perception is that the health unions which represent a smaller number of workers are stronger than the hospitality industry union which to my eye is pi** weak.
    Phillipe
    17th Nov 2015
    12:34pm
    This is a disgusting form of theft from loyal employees. Why aren't long term offenders jailed?
    Anonymous
    17th Nov 2015
    12:40pm
    Probably because they are getting protection from people where the stolen money is being directed.
    Grumpy
    17th Nov 2015
    5:06pm
    Spot on Philipe
    Jimbo
    17th Nov 2015
    1:20pm
    After 16 years with the same small hospitality business I was retrenched and subsequently discovered my super entitlements were consistently underpaid. In my case the ATO were excellent and after only one phonecall they chased my employer until all monies were paid. I got regular updates on progress and the whole process took 4 months.
    Adrianus
    17th Nov 2015
    2:11pm
    Jimbo, can I ask how long ago this was?
    Chris B T
    17th Nov 2015
    2:06pm
    Industry Superfunds are no angels.
    From my experience with them there just as bad if not worse because they pretend to be for the Worker. Like anyother, are for what's best for them.
    Removed my Funds Years ago, doing nicely and incontrol.
    Be very carefull with all superfund managers.
    roy
    17th Nov 2015
    2:09pm
    Hear hear.
    Tom Tank
    17th Nov 2015
    2:58pm
    My experience with an industry super fund was quite different to yours Chris B T as it was head and shoulders above any of the commercial funds.
    Chris B T
    17th Nov 2015
    8:50pm
    Tom Tank.
    I lost over $80k as a direct result from inquireing about the sercurity of my funds before the GFC, told not worry.
    Leave it in the balance fund, it will be safe as where I could put it in cash and no loss would have occured.
    How many others were affected this way.
    A run on funds from balance to cash would have caused problems for the fund.
    Gammer
    17th Nov 2015
    5:21pm
    Prior to retiring I would login to my superannuation fund every fortnight (at least) to check that my employer was depositing my super in a timely manner. Had I found my employer was not paying into my fund I would have followed up with my payroll office manager immediately and/or found a new job where it was being paid.... I did complain on one occasion (shortly after transferring to a new department) that it was not being submitted to the fund every fortnight; the manager said he sent it through three-monthly but I said that with the unit value fluctuating so much it was appropriate that it be paid in regularly shortly after pay day. The department accountant agreed with me so the manager changed his policy accordingly.
    You can't trust that anyone will act in your best interests so need to keep a wary eye on this yourself! Easily done in this Internet age.....
    Scrivener
    17th Nov 2015
    5:52pm
    That's the coalition.That's the IPA agenda to reshape Australia.

    This is well worth a look.

    IPA agenda to re-shape Australia
    March 2, 2013
    By Barry Tucker 2 March, 2013

    The Institute of Public Affairs (IPA) claims to be an independent think tank. It is funded by corporate and philanthropic donations (see update, 25 August, at end) and individual subscriptions. It is one of the bodies that came together in 1945 to form the Liberal Party of Australia and is rightly seen as an arm of the Liberal party.

    The IPA is disproportionately represented on the ABC’s tv shows The Drum and Q&A, although the ABC denies it and quibbles about who’s who. You may never have heard of the IPA. Before we go into the remainder of this article, here’s an episode of the ABC’s Media Watch, dated 09/04/2001, presented by Stuart Littlemore. It mentions what the IPA is, who some of its members are, its activities and where its main financing comes from.

    http://t.co/oXmnGBMjMR

    The political agenda of the IPA is no different than the agenda of the Liberal party. In a recent article on the IPA website, Be like Gough: 75 radical ideas to transform Australia, three IPA members wrote about what they see as Australia’s problems and listed 75 changes that should be implemented. See this page from the IPA website for the preamble to the 75-point list.

    The list has since been expanded to 100 items. Why the round figure of 100? I can agree with some of the points, like smaller government and ending vote-buying welfare. For the remainder, it is basically a plan to remove restrictions on business and industry to pillage and plunder resources, the environment and consumers.

    When the IPA talks about individual freedom it is referring to the freedom of individual capitalists and materialists to pursue their dreams at the expense of everyone else.
    Adrianus
    17th Nov 2015
    7:13pm
    If you don't like liberal ideas then criticise an idea rather than throw the baby out with the bath water. :)
    I guess what really irks lefties is the fact that only private enterprise creates jobs and we all need jobs.
    Peterrj
    17th Nov 2015
    7:48pm
    Super stolen ..... By employers or later by the tax man! Either way you will lose!!!!
    Anonymous
    18th Nov 2015
    12:01am
    Superannuation mostly do not attract tax (certain circumstances do but too complicated to detail here)... normally it has already been paid within the fund, basic 15% on contributions for all (whether $200,000 or $20million - that is where the wealthy cash in and divert a lot of their income into super in order to attract the lowest tax level).

    When you are paid an annuity from your super, it is exempt income and is not part of your income for tax purposes. For example, you can receive well over $20,000 pa from your super fund but you don't even have to mention it in your tax return.... only your other investments such as interest, dividends, rental income, etc.

    That unfortunately, leaves the employers and some superfund who steal your money but not the taxman.... on this occasion anyway.

    Besides, if we don't pay taxes, you don't get good roads, hospitals, schools, adequate police force, etc.... essentially a better standard of living.
    ozirules
    17th Nov 2015
    9:51pm
    I am outraged each time I hear that a company has gone broke and it's workers have lost their entitlements. Super should be paid into the funds at the same time as wages are paid. It should be an automatic funds transfer, set up when an worker commences employment. Money should also be paid into an independently audited trust fund to cover holiday and long service pay employer commitments. This amount should show on the annual report as a liability which reduces company profit and tax liability. To use these funds for any other purpose is theft from employees and tax fraud. A company that cannot survive without dishonestly using these funds does not deserve to survive as it has an unworkable business model. Whatever the size of the business or however well connected the principals are, they should suffer the same fate as any other dishonest law breaker.
    Adrianus
    18th Nov 2015
    9:25am
    Should those rules apply to Unions as well? The last few HSU bosses have declared themselves bankrupt.

    17th Nov 2015
    11:52pm
    This is a blow as I can assure you that many Australian workers are not receiving their superannuation because of wayward employers who seem to be getting away with it because it is to hard and way too costly for the ATO to sue the directors/executive officers when they simply dump the corporation as insolvent and starting another. Corporation Law sounds good but in practice it does very little to protect anyone against this sort of fraudulent behaviour, unless you have lots of money to burn.

    Now, we have a situation where the ATO watchdog can't even 'sufficiently' penalise these miscreants and again it is the little person who suffers.

    My sister has had two employers in a row do the above and she has lost two years of her superannuation. My niece, needed my help on two occasions, to squeeze her employer just to get normal super as an employee and in her next job they told her after two years that they didn't have to pay any because they classified her as a contract worker (which in law she wasn't but it doesn't matter because contract workers are also entitled to superannuation if they pass specific tests). It took awhile but we ended getting that back too. Their comment before I become involved was .... take us to court then.

    Granted businesses are getting better but when there is a shortage of cash flow, rather than cut down on owner take home money, they tend to just not pay or under pay employee super.

    We really need a Superannuation watchdog with big teeth and lots of money but we are getting the opposite... just because it is workers.
    Jimbo
    18th Nov 2015
    10:12pm
    Frank you asked aboat the ato.I notified them in early November 2014 and by early March 2015 a full settlement of past super and my ex employer received a heavy fine as other employees were also involved.
    Adrianus
    18th Nov 2015
    10:26pm
    Thanks Jimbo. May I ask if it was a big employer? I am doing battle with a small business, looks like it may be trading insolvent. This is against the law for a company but I don't think it is for a sole proprietor or partnership.
    Meri
    20th Nov 2015
    9:12am
    Employees need to be more aware of the guidelines & entitlements paid to them. Checking their superannuation statements & reconciling it to their payslips, on a regular basis. Not only for missed payments but also of the following.
    My husband was salary sacrificing for over $20 years.I was unaware that it was legal for an employer to calculate their super guarentee % obligations on the reduced OTE (after the employee's salary sacrifice) OR an employees salary sacrifice amount can count towards the employers super guarentee amount. (His employer went with the first option, not the second. We realised way too late the amount going into super wasn't % of his OTE before sacrifice)
    I don't understand why a govt. who wants to encourage self sufficient retirement would penalise those trying to achieve this.
    Adrianus
    20th Nov 2015
    10:00am
    Meri, that does not sound right. If your husband had a proper salary sacrifice arrangement, then it would be in writing, either in a letter he wrote or a form completed by him. In any event the SGC should be shown separately on your statement.
    Meri
    20th Nov 2015
    10:19am
    Thanks for your comments Frank.
    He worked for a small business in Darwin where formality wasn't their forte. It appeared as a salary sacrifice on his payslip & on his superannuation statement but his SG amount was (for example when it was supposed to be 9%) $9/week less than if he wasn't sacrificing $100/week. The info is in the govt website Business/Super for Employers/in detail/Salary sacrifice. Over the years it calculated to be a large amount until he renegotiated with his boss to calculate his SG on his OTE before salary sacrifice.
    Meri
    20th Nov 2015
    10:28am
    He wasn't on a large income & thus saving 15% tax by salary sacrificing but he lost 9% (when SG WAS 9%) of this saving to his employer. Why does the govt.have a specific clause to allow this?
    Adrianus
    20th Nov 2015
    11:36am
    Meri, it's good that you noticed it early. Thank you for bringing this to our attention.
    In the cases that I have seen the SGC is not reduced.
    When a Salary Sacrifice arrangement is in place the concessional super contribution is seen as an employer contribution so it does effectively reduce the employees income. Anyway your husband was still better off by doing the SS then doing nothing, but it doesn't excuse the employers lack of disclosure.
    I still think there is a strong need for "fee for Service" Financial Planners to act as a third party advisor in these cases before arrangements like this are agreed upon.