Bosses have been robbing Australian workers, with $2.75 billion not paid in compulsory superannuation.
Figures released by the Association of Superannuation Funds of Australia (ASFA) estimate that 65,000 Australians are affected. The average loss is around $4000, or nine months of compulsory superannuation payments, for an individual earning a gross annual salary of $80,000.
Unsurprisingly industries that are hardest hit are those that are traditionally more transient in nature, such as construction, taxi services and hospitality.
ASFA chief executive Pauline Vamos said the non-payment of compulsory superannuation would hit workers hard when they reach retirement. “These people [not being paid super] are with no retirement moneys and they will therefore be relying on the aged pension,” she said.
“We are concerned about non-payment and deliberate underpayment in particular.
“We also have an issue with small employers who get behind on their payments and they are too scared to tell the ATO because they may get fined.”
Legislation proposed earlier this year by the Federal Government aims to reduce superannuation regulation for small business, meaning more people could be missing out. The report, Review of Tax Impediments Facing Small Business, published by the Board of Taxation, recommended that the minimum threshold for the superannuation guarantee should be based on a quarterly, instead of a monthly test. Legislation currently requires employers to pay 9.5 per cent superannuation for any employee who earns more than $450 per month.
A recommendation was also made to ease the conditions of the Superannuation Guarantee Charge, which is applied to employers who fail to pay superannuation on time.
In response to the recommendations, Cbus CEO, David Atkin, said back in January this year, “We don’t think policy makers should accept any recommendations about changes to our superannuation system and laws that do not advance the objective of the system – namely to assist Australian’s in funding their retirement.”
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Saving for retirement is difficult enough without employers failing to make their superannuation guarantee payments. Penalties for such employers should be made tougher, not more lenient.
Employers, like everybody else, have to budget, in this case staff on-costs. Construction, hospitality and the taxi industries, as major culprits, may be incredibly competitive, but that doesn’t mean employees should foot the bill for employers who can’t properly run their companies.
With the average retirement payment from super for those aged between 60 and 64 being $198,000 for men and only $112,600 for women, every dollar of superannuation counts. Compounding interest means that $4000 of super actually becomes $8879 after 10 years, with an effective interest rate of 8.3 per cent. Truly, from little things, big things grow!
Even though they should know better, many Australians still consider their superannuation as something only to be concerned about when they are approaching retirement. But by that time, hoping to redress the balance of any lost or unpaid superannuation is a lost cause. Even if you only just meet the minimum threshold for the superannuation guarantee, you should be checking that this is actually being paid into your super fund and that your super fund is delivering not only the best return, but also has the lowest fees.
If you find that you are entitled to superannuation that has not been paid, you should speak to your employer or contact the ATO to launch an inquiry.
Are we still too casual when it comes to our superannuation? Should small employers be cut more slack when it comes to their compulsory superannuation payments? Have you been a victim of an employer who has failed to pay you your full super entitlement?