Is your business doing the right thing with Super?
Around 2.4 million or almost one-third of Australian workers eligible for super are missing out on some, or all, of their entitlements, and little is being done about it, a new report reveals.
Under the Superannuation Guarantee (SG) employers must contribute 9.5 per cent into the super account of every worker over the age of 18 earning $450.00 a month.
But, using official ATO and ABS data, Industry Super Australia and Cbus have conservatively calculated that rogue employers are dodging compulsory superannuation payments to the tune of $3.6 billion a year (2013-2014). This equates to $1,489.00 or almost four months of super for the average worker affected.
Industry Super Australia chief executive, David Whiteley, says: “It is disturbing that nearly one-third of workers eligible for SG are being short-changed.”
While industry super funds chase unpaid superannuation, the report draws attention to wider inaction.
Steve Bracks
Cbus chairman Steve Bracks says: “We have stories of workers who’ve put faith in the system only to discover months later that their super, including extra voluntary contributions, has not been paid into their accounts and is lost completely when companies move into liquidation.”
“Employers who do the right thing by their employees are competing on an uneven playing field against those who don’t,” said Bracks.
The joint Industry Super-Cbus report highlights little-known but serious system gaps.
It recommends specific actions such as:
1. Real-time payment, reporting and compliance of SG instead of the 25-year-old rules that allow employers to hold on to money for up to 4 months
2. Closing the loophole that allows employers to count salary sacrifice amounts towards the SG total
3. Greater resourcing for the ATO to recover unpaid SG
4. A clear, enforceable mechanism for super funds to recover unpaid super from employers on behalf of members, and
5. Retaining strong penalties against employers who fail to pay SG including personal liability for company directors.
A recent Productivity Commission report described unpaid SG as “one of the more egregious leakages in the superannuation system.”