$44 billion could be lost to retirement savings in next 10 years
New research shows $44 billion could be lost to retirement savings in next 10 years through non-compliance with superannuation laws according to Cbus, one of the largest industry superannuation funds, who released new research today which shows an estimated 690,000 Australians are impacted by growing non-compliance in the payment of compulsory superannuation entitlements.
David Atkin, Cbus CEO said the research showed an estimated $2.6 billion was lost to workers’ superannuation accounts through the non-payment of legislated superannuation guarantee entitlements in 2013 - with a yearly growth trend line now established at 5% per annum.
“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.
“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.
“The Federal Government needs to legislate for tougher penalties and increase the level of resources provided to the ATO and other regulators so we can tackle the problem more effectively.
“Recent legislation by the Government that reduces penalties for employers’ who fail to make super contributions on behalf of their employees are a step in the wrong direction,” he said.
Mr Atkin said the construction sector was one of the worst for non-compliance. He also noted a concerning growth in non-compliance by solvent and current trading companies.
“Cbus works hard to improve compliance in the construction sector with our enforcement action recovering well over $400 million in members superannuation entitlements over the last decade.
"The vast majority of the employers we deal with do the right thing and pay their employees entitlements. They agree that it is unconscionable that a number of employers think it's okay to game the system and use their employees deferred wages as business cash flow, setting up an unfair advantage. "We need to ensure the rules are being enforced. There are a myriad of things we can do today to upgrade the system through technology, but as a minimum we should now move payment of superannuation to align with wages; we should better equip and resource our regulators; and we need to assist both employees and employers in understanding their rights and obligations,” he said.
Key findings from the Report include:
- Estimated non-compliance with superannuation guarantee (SG) obligations costs employees ~$2.6bn pa, or 4.4% of total SG contributions
- At current growth rates, total losses to the superannuation system resulting from 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
- SG non-compliance has four main sources, in order of importance:
- Employer non-compliance (SG contributions are not made at all, or only in part); $1.4bn
- Cash economy (SG is part of avoidance of PAYG and other employment obligations); $0.8bn
- Sham contracting; $0.3bn
- Employer insolvency; $0.2bn
The report was prepared for Cbus by Tria Investment Partners and copies may be obtained by contacting Rod Masson at Cbus.
The ACS Seminars are a series of full-day information and networking eve
AccountantChange is a highly innovative quarterly training program for B
The rise of big data, coupled with digital capability, has transformed t