Laws costing Aussies millions in super

ISA is calling for a change to superannuation laws that are costing Aussies millions.

Laws costing Aussies millions in super

Industry Super Australia (ISA) is campaigning against laws that cost Australians millions in lost super interest.

Analysis of Australian Tax Office (ATO) data in 2015 revealed that laws allowing employers to pay super quarterly rather than fortnightly have cost Aussie workers around $225 million in interest.

ISA found that around 2.3 million workers aged 20-29 collectively missed out on $35 million in interest in 2015 alone, while 1.9 million aged 40-49 missed out on $55 million, and 1.6 million aged 50-59 missed out on $50 million.

This represents around $12,475 by retirement for a full-time worker aged between 20 and 67 years old.

Super payments can be withheld by employers for up to four months at a time, which ISA chief executive Bernie Dean said, “highlights the absurdity of continuing with laws that allow superannuation entitlements to be withheld for up to four months”.

“We’ve welcomed any and all efforts to improve compliance, but it won’t change the fact that some employers will go on using the payment hiatus for business cash flow,” said Mr Dean.

“Essentially, workers are subsiding businesses at the expense of their retirement savings.

“Every penny counts in retirement, and this interest could be the difference between having enough and going without. It’s not fair, and the rules must change,” said Mr Dean.

A recent ISA poll found that 70 per cent of Australian workers are unaware that even though their payslips show super contributions on a weekly or fortnightly basis, those super payments weren’t actually made.

ISA has called on parliament to align superannuation payments with wage payments, as per a Senate Committee recommendation in 2017.

Were you aware that your super payments weren’t being paid in line with your wages? How much super would you have missed out on?

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    COMMENTS

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    25th Feb 2019
    9:35am
    Oh sure . And how much have workers “saved” when the timing of their contributions sent during a falling market enabled them to buy stocks cheaply
    TREBOR
    25th Feb 2019
    10:50am
    Oh... about as much as they've 'lost' when the timing of their contributions sent during a rising market enabled them to buy stocks dearly...
    Anonymous
    25th Feb 2019
    10:52am
    Exactly my point
    TREBOR
    25th Feb 2019
    11:13am
    If only market fluctuations could be timed - think of the rush on Fat Day - the day when investors could buy bargains to enhance their portfolio and potential future earnings...... of course, such a rush would cause a price rise.. but, oh, well...

    When you play poker machines, you take the hits with the highlights...
    TREBOR
    25th Feb 2019
    10:49am
    Interesting - every day a new one...
    54-11
    25th Feb 2019
    11:44am
    What an ignorant troll you are. Markets go up much more than they go down. Workers are losing a lot of money because of this rort - employers are using employees money to assist with their cashflow. That should be illegal, it is theft of workers' entitlements.

    Another aspect of this rort is that when people use the new concessional limits, they cannot use the full amount as they are not sure when the SGC would be paid into their account (penalties for getting it wrong are very high).

    It's about time something was done about this - if wages and taxes can be paid regularly, so can SGC payments.
    54-11
    25th Feb 2019
    11:47am
    This was a reply to Lothario
    Anonymous
    25th Feb 2019
    1:10pm
    See my response below .
    Anyways no need to be rude mate . You sound like a very unhappy person
    It’s not a rort
    Small businesses need time to reconcile their figure and make payment
    purplejan88
    25th Feb 2019
    1:30pm
    exactly right 54-11 - in this day and age of electronic transfer SGC can be paid at the same time they do wages and taxes
    TREBOR
    25th Feb 2019
    2:42pm
    My last job, driving a club bus - the boss had no problem paying it in fortnightly - he was an accountant by training......
    Greg
    25th Feb 2019
    4:46pm
    Lothario - if a business in 2019 needs time to reconcile their figures they shouldn't be in business. Payment should go to the super fund the same day as you're paid. All they have to do is pay the 9%plus (whatever it is at the moment), nothing to reconcile.
    Rae
    25th Feb 2019
    5:41pm
    I paid contractors and their super and tax at the same time. It was never an issue. Small businesses need to become efficient or get out and let others who can manage better have a go.

    Greg is right it is an accounting practise that is clearly wrong. The sums not being paid at all are enormous.
    Sundays
    25th Feb 2019
    5:47pm
    The payroll system details the amount on the employees payslip, so all calculations have been done. Same time the employer sends the payroll file to the bank, a file to the super companies could also be sent. It’s a nonsense to suggest otherwise. Superannuation was sold to workers as part of their salary. Pay it at the same time
    Captain
    25th Feb 2019
    9:03pm
    Lothario, I was the Accountant for a company that employed about 60 full-time and 35 part-time staff and we paid the SGC to the various Super Funds the day after pay-day.

    Time taken for reconciling figures went out with the introduction of software packages such as MYOB. Before such software, it still only took a short time (not even hours)to determine the SGC. All you needed was competent financial staff.
    Anonymous
    25th Feb 2019
    9:17pm
    Captain - if you were an accountant worth your salt , you’d make sure the payment to the supoerfunds was made on the last day to meet compliance requirements and if there were no penalties for missing the dates then I’d pay it even later
    Your loyalty is to your company first and maximizing its working capital requirements / revenue
    Obviously a bean counter and not a financial strategist
    Captain
    25th Feb 2019
    9:39pm
    Lothario, our Board of Directors and the Staff had an agreement regarding the SGC payment and I complied with the agreement. I was a very good bean-counter and and a fairly good financial strategist. Before the company hired me they made small yearly losses, however within a year of me being hired the company made a reasonable profit and the profits grew each year that I was employed there.
    Anonymous
    25th Feb 2019
    9:42pm
    Well done Captain
    You make a Chartered Accountant and CFO like me very proud
    I would have hired you :))
    Not a Bludger
    25th Feb 2019
    11:44am
    Any campaign/survey by the rentseeking, union controlled ISA needs great caution and a detailed examination of the assumptions used.
    Industry funds have long lusted after control of all superannuation mainly for the benefit of their union boss directors and using members funds for political campaigns.
    54-11
    25th Feb 2019
    11:48am
    This has little to do with ISA - this is about workers' entitlements
    Greg
    25th Feb 2019
    4:48pm
    What the hell are you talking about - this is about paying into super more regularly, any super fund.
    Karl Marx
    25th Feb 2019
    8:37pm
    Not A Bludger, why do you always attack the unions. They have done a lot of good for the Australian worker. It was the unions that helped set up super.
    After long research I now realise that the Industry funds are far, far superior to the retail funds in every way largely due to the fact that they have union representation on the boards that work for the membership & aren't greedy like the retail funds.
    Anonymous
    25th Feb 2019
    8:41pm
    Whoever you are imitation “Lothario”, you’re one sad little prick if you have to resort to posting as me .

    But it’s ok , I’m used to being idol worshipped
    54-11
    25th Feb 2019
    8:47pm
    I think I like the new Lothario
    jackie
    25th Feb 2019
    11:48am
    What's wrong with employers paying super with the employees pay cycle? Weekly, Fortnightly and Monthly. This way a worker will miss out on 3 months super when they retire. That is wage theft as usual.
    54-11
    25th Feb 2019
    11:56am
    Exactly. Every pay system is quite capable of doing this - in fact, that would automate the process much more than it is now. The only reason it doesn't happen is so that employers can steal workers' money. How many businesses have gone bust with these amounts unpaid.
    Greg
    25th Feb 2019
    4:51pm
    54-11 - Yep they have the money to use while it should be in YOUR fund or they don't pay at all, especially with the kids, they don't know, they don't understand and get ripped off.
    KSS
    25th Feb 2019
    12:13pm
    Where I work we are paid fortnightly and super is paid monthly.

    The only time this can be a problem is if you are salary sacrificing and the payment due in June is paid in July which can mean you over shoot the salary sacrifice cap the following year.
    54-11
    25th Feb 2019
    12:17pm
    Most employers pay irregularly, usually roughly quarterly, which makes huge problems for those trying to maximise their caps.
    Adrianus
    25th Feb 2019
    12:21pm
    I agree with super being paid more promptly. Been saying this for years. I would have thought by now that it had fallen into line with the ATO monthly reporting schedule. We have the technology now to pay all of an employees wage on the wage cycle so there is no excuse. And no need for more clearing houses where somebody makes big bucks for holding the loot.
    Hairy
    25th Feb 2019
    12:45pm
    Some employers ,example fuel outlets .dont pay out for up to a year . This might just be the tip of the iceberg.
    Greg
    25th Feb 2019
    5:23pm
    Well by law they cannot do that, should contact the ATO. They will investigate WITHOUT letting the employer know why they have targeted that particular business so you won't be implicated.
    Adrianus
    25th Feb 2019
    5:57pm
    Hairy, Greg is right. Speak to co-workers. If they have the same problem get them to also contact the ATO. The ATO will move a lot faster if they have more than one complaint from the same employer. If you are the only one then expect long delays.
    Curious
    25th Feb 2019
    12:51pm
    I think the whole Superannuation Act and Regulations need to be overhauled for accountability and transparency. The employees and employers contributions need to be separately accounted for in a timely manner, as well as interests, dividends, and capital gains. On the other side of the ledger, all actual and accrued expenditure such as charges and fees must be openly scrutinized and reported.

    As a result of the Bank Royal Commission, the ISF returned to me almost $6,000.00 for two consultation services in the past four years, which I didn't have. That equals to 16.66% of my annual allocated pension. I was absolutely gobsmacked.
    KSS
    25th Feb 2019
    1:07pm
    The employer and employees contributions are shown separately on my super statements so not sure what you mean here.
    Curious
    25th Feb 2019
    1:16pm
    KSS, they are not accounted for at the same time. Some people don't even know that their employer has sent in their share of the contributions. If an employer goes bankrupt, it will be very difficult to retrieve their outstanding contributions from the receivership.
    Hairy
    25th Feb 2019
    1:06pm
    Did we not forgo wage rises so employers could contribute super instead for retirement.so the use of super payments by employers is actually wage theft.and the rorts and theft from employees is still being practised . Year after year , no goverment has changed anything except the names .just like the pension fund is now welfare . Trust pollies at your own risk. Lower than used car salesmen
    Rae
    25th Feb 2019
    5:52pm
    Yes and we are 26 years into compulsory saving through superannuation.

    Notice the COMPULSORY bit. It should be paid at the time pay and tax is allocated.

    Automatically. Using a computer.

    25th Feb 2019
    1:06pm
    How much are members losing because the industry funds don’t credit contributions on time , don’t credit franking credits to member accounts straight away, don’t apply to the ATO for the refunds on 01 July , don’t appropriate the correct profits and dividends to member accounts as soon as they are received / realized etc
    Methinks members are being robbed of billions compared to the chicken feed this article is talking about
    54-11
    25th Feb 2019
    1:12pm
    Admin, isn't it time you banned this clown? He's clearly mentally retarded and constantly trolls.
    Curious
    25th Feb 2019
    1:27pm
    54-11, I don't agree with Lothario all the time. However, what he said here it seems pretty accurate. Lothario is not trolling, he is stating the reality.
    54-11
    25th Feb 2019
    1:31pm
    He's clearly retarded - his first comment was that people are not losing money because of withheld super payments. What about interest, dividends, returns from property/infrastructure investments? These are all coming in regardless of the state of the share market.

    The fool is just trolling, he does it all the time and needs to be banned.
    Curious
    25th Feb 2019
    1:37pm
    Currently, interest, dividends, returns from property/infrastructure investments are not separately reported to the superannuants. We are all none-the-wiser. We all agree with you, they need to be accounted for and cleared stated in writing.
    Anonymous
    25th Feb 2019
    1:43pm
    Yes there is no transparency whatsoever in how and when the capital gains and income returns from a members portfolio is calculated and credited .
    Why not ask for laws that make this transparent
    This is far more critical than talking about a piddly $15 on average per person .

    How much is lost to a member because of delayed crediting and money taken off the top by our union chiefs
    54-11
    25th Feb 2019
    2:06pm
    That has got nothing whatsoever to do with this topic, which is all about withheld super payments. Take your trolling somewhere else.
    TREBOR
    25th Feb 2019
    2:45pm
    Well - the retail funds operate much less efficiently and cost a lot more.. why single out industry funds? You reckon the banks don't hold super for whatever time so they can play the short term money market?
    TREBOR
    25th Feb 2019
    2:48pm
    Look - I'll make it easy and remove your ideological cancer for you at the same time - just a little nip and tuck....

    "How much is lost to a member because of delayed crediting and money taken off the top by our banking and financial institution chiefs ".

    All done on Medicare..... I don't charge what some do... not interested in filthy lucre as such - just in serving people....
    Anonymous
    25th Feb 2019
    2:50pm
    Everything to do with the topic and hypocrisy of the industry funds Politicizing the issue and penalizing small businesses adding to their compliance costs
    Why not focus on the bigger picture and the bugger losses faced by members due to industry funds bending the rules and rorting their members
    Just because you don’t like what what I say doesnt make my post any less relevant
    Duh
    Anonymous
    25th Feb 2019
    2:55pm
    Thebore - I’m just calling out the hypocrisy of the industry funds who are ones campaigning in this issue as per the article

    I’m sure they all do it but these hypocrites are attacking employers instead of sorting out their own backyard format - typical union b/s
    TREBOR
    25th Feb 2019
    3:21pm
    You got a single piece of substantial proof to support that, Lothario? If that is the case, simple reason says that non-industry funds are much worse at what you claim is rorting and ripping off members, since they charge more and pay less generally.

    You need to remove your LNP Banking glasses and see Specsavers...
    TREBOR
    25th Feb 2019
    3:49pm
    All easily resolved using The Trebor Scheme...

    Ein Roof, Ein Rule, Ein Limit, rest taxed by Das Reich...... no preferential schemes, nor hidey holes.... everyone has a minimum dependent on years in-country, everyone has the same top limit, everyone has the same rate of return - all other goodies and freebies are taxed....

    Budget problems solved.....
    Rae
    25th Feb 2019
    5:54pm
    Yes a lot but not nearly as much as the bosses that don't pay up at all or the retail funds that do all that and then charge hefty fees for poor returns.
    Not a Bludger
    25th Feb 2019
    5:56pm
    Lothario, don’t let the moaning, permantly outraged get you down - as usual, like 54-I1, they have to resort to personal insults often verging on the potty mouth.
    Sundays
    25th Feb 2019
    5:57pm
    Lothario, it has nothing to do with adding to the compliance costs of small businesses. Superannuation is workers entitlement. If you can’t afford to pay your employees be that the award, overtime, penalty rates etc. then you can’t afford to run a business
    Rae
    25th Feb 2019
    6:03pm
    I must agree with Lothario on the point that Superannuation Funds in general are far less efficient that a saver investing themselves using a good index platform and buying the dips, rebalancing and taking profits when necessary. Even SMSFs pay far more than an individual just investing outside of super for some weird reason.

    Just the low cost of transactions, ability to time markets a little bit and rebalance quickly make a huge difference. The flexibility of taking profits is priceless and Superannuation doesn't allow it without lot of extra cost and effort.

    Remember it is compulsory though and that should mean for employers too. Heavy gaol terms for not paying should apply as they do it I was to illegally take out my super before my retirement date. it's the same thing.
    TREBOR
    25th Feb 2019
    6:18pm
    So.... errrr.... on the subject of not being a bludger.... old Not A - how exactly are you not a bludger?
    Karl Marx
    25th Feb 2019
    8:39pm
    Not a Bludger. If anyone resorts to bullying & being a potty mouth it's you so shut up unless you have something constructive to contribute.
    purplejan88
    25th Feb 2019
    1:28pm
    my contributions are paid in quarterly - no need for this with electronic transfer these days -
    Rae
    25th Feb 2019
    6:05pm
    Mine were paid in fortnightly and as you say it was a direct deposit using electronic transfer.
    floss
    25th Feb 2019
    1:32pm
    Only a fool would put down Industry Funds and not do the same to Retail Funds ,did you not read the results of the the Royal Commission into banking.You do the Liberal party no favors by your stupid comments.
    Rae
    25th Feb 2019
    6:12pm
    floss the very rare, high net worth retail fund does do better and Lothario may fit that category. It is really hard for these people to understand normal income amounts or how PAYG workers can be shafted. It doesn't happen to them. Like the politicians they are rich people with large incomes and are treated well. It's impossible for these people to actually have empathy because they have always been well off.

    Some top funds do achieve great results but come with high risk which you can bear if you have real wealth. They are not for ordinary people. In fact an ordinary income earner in the bottom 4 exiles possible couldn't even join those funds.

    I can imagine all Hell would break loose if Lothario wasn't paid his dues on time.
    Rae
    25th Feb 2019
    6:13pm
    bottom 4 deciles (spell checker error sorry)
    TREBOR
    25th Feb 2019
    6:22pm
    Loathie boasts about drawing a salary from hi 'family company', drawing on share returns - and never paying one cent in tax.

    No wonder he attacks anything remotely tied with the incoming Labor government that has his kind of arrangement fairly in its sights....

    That's what he's about, people - he figures that by attacking industry funds, he can attack the labor movement, and thus attack the Labor government... because he knows they are coming for his 'family company' that does not pay its dues and gives him the opportunity to not pay his.
    imac
    25th Feb 2019
    2:03pm
    No matter what anyone says, nothing will change until super for every Australian (including politicians)is the same, no arguments. One country, one set of laws regarding super. of course this will never happen as long as we have traitors in Canberra who never change anything unless it benefits them. They do not represent the people, they represent themselves.
    Bulla
    1st Jun 2019
    3:49am
    Why should the politicians get super and also pension and that too with no conditions attached like those applicable to ordinary citizens?
    54-11
    25th Feb 2019
    2:05pm
    There is one thing that has not been discussed in all this. Not only are workers' missing out on THEIR money, and the employers getting a windfall gain. This is money that is no longer invested in super funds, in property, infrastructure and equities. These are productive assets.

    This is a significant opportunity cost to the entire economy and we all lose out.
    Rae
    25th Feb 2019
    6:18pm
    Yes and how can it be compulsory if the employer refuses to pay it.

    25th Feb 2019
    4:41pm
    At least 4 monthly is an improvement on the original plan which gave employers the option to lodge funds annually. I wonder how the system actually works. Employer sets aside employees super, sends funds off to super company, employees account credited with funds. Sounds simple but I'm guessing that there is a gap between the collecting of funds and the crediting to the employee's account.

    Nice of a Senate Committee to make the recommendation about how super funds were to be paid. Why was this not done back in 1992 when the scheme was established? I also wonder if this is suddenly raised during an election year but surely I'm just being too cynical. Nah, industry controlled super funds are above politics.
    54-11
    25th Feb 2019
    4:50pm
    OM, this is not about super funds, industry or retail. It is about employers misusing employees' money. They use these deductions, which belong to workers, for their own cashflow, and withhold as long as possible before remitting to the super fund. People then miss out on the income generated, while the bosses save on their own lines of credit.

    It is far more than a rort - it is gross misuse of money that does not belong to them. It is the same sort of egregious behaviour that was so vividly exposed in the Royal Commission.
    Greg
    25th Feb 2019
    5:34pm
    ""Sounds simple but I'm guessing that there is a gap between the collecting of funds and the crediting to the employee's account.""

    Mate the only "gap" is the employers paying the funds over every 3/4/6 months.

    If it's a bigger firm they use their computer to debit their account one day and the funds will hit the super fund account the next day normally. Smaller businesses may do it manually, may actually write a cheque and post it to the super fund so could be a week or so there, HOWEVER, this is 2019 and most businesses would get their bank to debit their account and send the payments to the superfunds, again next day or maybe the day after.
    Anonymous
    25th Feb 2019
    5:45pm
    54-11 - stop being a drama queen. As long as employers pay within the stipulated timeframe there are no issues
    TREBOR
    25th Feb 2019
    6:23pm
    Time to change the stipulated time frame.... all solved....
    54-11
    25th Feb 2019
    6:28pm
    Exactly, TREBOR, which is what this article is all about. The problem is that a certain trolling clown keeps hi-jacking it to make crazy, unsubstantiated, outrageous statements that have nothing at all to do with withholding super.
    Cheezil61
    25th Feb 2019
    4:43pm
    So many employees i know don't even get any super that they are entitled to (especially young ones) & there is f*k all they can do about it! Rort is an understatement!
    Greg
    25th Feb 2019
    5:39pm
    There's a LOT they can do about it - if they are entitled to a super payment they contact the ATO. The ATO will investigate the employer (without telling them who informed them) and when it's found that payments have not been made the employer will be made to pay ALL payments due plus some interest to date plus they are fined.

    I had the exact same thing happen to my daughter, she didn't know about super until one day I became involved. She contacted the ATO and a few months later the overdue amounts plus interest was credited to her super fund, the employer also received a fine.
    Rae
    25th Feb 2019
    6:24pm
    Yes help them to notify Cheezil61.

    The more these dodgy operators are hit the sooner they'll learn to do the legal thing.
    thommo
    26th Feb 2019
    7:53am
    The super industry is rorting us big time.. My super fund charges both an admin fee and an 'advice' fee, costing about $100K over 10 years...That money should be in my pocket for my retirement, but no, they're allowed to pinch it...that is daylight robbery, and the government doesn't do anything about it...They;re just looking after the big end of town....as usual.
    Captain
    26th Feb 2019
    9:18am
    Do some research and change Super Funds. You are allowed to change Funds.

    It's your money, you need to look after it.
    thommo
    26th Feb 2019
    12:36pm
    Captain, I can't change unless I am prepared to lose the deeming provisions of the part age pension set late 2014.
    Captain
    26th Feb 2019
    2:15pm
    Thommo, I don't understand how the deeming provisions affect you unless you are retired and you semester to be saying you are not yet retired.

    I do agree that the LNP and Labor are only interested in courting the big end of town.
    IndyLopos
    21st Mar 2019
    1:15pm
    What is even worse is that when a company goes into liquidation, unpaid super is the responsibility of the directors. This means thousands of $s, even in SGC(Super Guarantee payments), owed for more than 4 months could go down the drain, even if they were part of the salary package. This is another reason why the laws should be changed.
    Claims for unpaid or underpaid SGC super payments are normally processed by the ATO, but once a company goes into liquidation, the ATO rejects such claims.
    Bulla
    1st Jun 2019
    3:43am
    That is only one or at best some of the of the ways how" so called road to retirement income will do"to enable the retirees(except the elites elected members of parlia ment who gets extremely high amount of salaries,super,perqs,granted and not granted but stolen and then huge amount of paensions without any minmum age, assets /incone test etc which all is kept concealed from public obviously so that people may not start comparing what they are deprived of.Super is not for retirement income and at best can be a supplement only while elected representatives should not be entitled for these huge entitlements as the positions they occupie are only volutantry public offices and most of them have huge income and assets as compared to ordinary citizens.Super fund is no gaurantee that each subsciber will get a certain minimum amount on retirement.Much will depend on that how much of that is siphined of by the funds directly and indirectly or because of governments messing up of economy,costs over run(about which no one is accountable out of those who are entrusted with the accountabilty but I have not yet anyone is scrutines or held accountable for billion of dolars wasted or"God know were that money goes.
    Bulla
    1st Jun 2019
    3:56am
    I read and assume many of you must have,that a clss action has been filed bymembers of AMP who have been charged exceess fee for no services where as government is pretending as if it has nothing to do with the unauthrised payments received by AMP?SCOMOavoided appointment of Banking commission and now will do its best not to initiate any action on the ecomendations by the Commissioner some of which have already been diluted.