More than a quarter of Australia’s workers have been ripped off $5 billion in super they’ve earned, while politicians refuse to fix the underpayments scandal.
A new Industry Super Australia (ISA) report has found almost 3 million workers lose on average $1,700 in super each year. Those dudded on super can end up retiring with up to $60,000 less.
ISA’s analysis of tax data shows young workers and those on lower incomes are most likely to be underpaid their super, and underpayments are rampant in blue collar trades and hospitality.
ISA’s report, Super Scandalous how to fix the $5 billion scourge of unpaid super found dodgy bosses have exploited lax enforcement and loose laws that allows them to only pay super quarterly into the workers’ fund, despite what it says on a payslip.
The report’s key recommendation for fixing the unpaid super scourge is to mandate all employers pay super into a workers’ account when they pay wages.
Not paying super with wages makes it difficult for workers to keep track of their money and allows payments to fall through the crack.
Federal politicians have known about this solution for years but have failed to act. MPs get super paid on payday and so should workers.
While Parliament has dithered, ISA analysis shows that, in the last six years, the cumulative unpaid super debt climbed to an eyewatering $28.8 billion. More will be lost unless our politicians act.
Unpaid super creates an unequal playing field, as the majority of employers doing the right thing are undercut by competitors who are ripping their workers off.
ISA’s analysis of the most recent 2018-19 ATO tax file data found:
Ø Almost 1.7 million men and 1.3 million women have been underpaid super
Ø Men lost $3.4 billion and women $1.6 billion
Ø A third of workers under 30 – about 890,000 – have been underpaid
Ø Half of those earning less than $25,000 missed super payments and 30% of those earning between $25,000 and $50,000 were underpaid
Ø About 40% of blue-collar workers (machinery operators and drivers, labourers, technician and trade workers) have been underpaid super.
Workers must largely rely on the Australian Tax Office to recover their money as it is difficult to sue for super.
But the report found that unscrupulous employers do not fear the regulator. With good reason, the Australian Tax Office only recovers a dismal 12% of unpaid super annually, rarely issuing maximum penalties or publicising the little enforcement activity it does carry out.
If the ATO is unwilling or unable to recover workers’ savings the law should be changed so that employees, the Fair Work Ombudsman, and others acting on behalf of workers can.
Now the country is coming out of lockdowns politicians should give greater priority to fixing the $5 billion unpaid super scourge scandal and commit to:
Ø Mandate super payment at the same time as wages
Ø Lift enforcement activity and force the ATO to issue and publicise penalties for not paying super – so dodgy employers can see there is a cop on the beat.
Ø Empower employees and representatives to recover unpaid super debts.
Ø Extend the Fair Entitlement Guarantee so workers can recoup their savings in a company goes bust – at the moment super is not included.