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
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?