Retirement savings gap shows those ripped off are falling further and further behind

The great unpaid super scandal: retirement savings gap shows those ripped off are falling further behind

The savings gap between those Australians robbed of their super by rogue employers and those workers paid correctly has blown out by 25 per cent in just three years, with new analysis shining a light on the unpaid super epidemic.

New Industry Super Australia (ISA) analysis of tax office data from 2016/17 by ex-treasury official Phil Gallagher has revealed the extent of the theft, where employers withhold super payments to prop up their own books, robbing workers of their rightful entitlements.

The analysis shows since the first ISA analysis of ATO data in 2013/14, the number of workers short-changed super has climbed by 90,000 to a total of 2.85 million Australians being ripped off $5.94 billion in super entitlements (more than $2,000 each a year) – an increase of $340 million.

Most startling is the increase in the cumulative savings gap between those underpaid super in a single year, and those paid their entitlements – that has seen on average, a person not underpaid their super end up with around 50 per cent more super than a worker underpaid in 2016-17.

Underpayment seems to repeatedly affect the same workers and lead to large cumulative differences in their super balances.

The average gap in savings has blown out to $24,506 for 2016/17, up from $19, 709 in 2013/14 – an increase of 25 per cent in the space of just three years.

It’s even worse for young workers under 25 with wages below $30,000 – those not underpaid in 2016/17 have an astonishing 81 per cent more super accumulated than those who are underpaid. This shows how much damage could be done if the Government continues to fail to act.

The report has also shone a light on dodgy employers who exploit a loophole in the law where if workers choose to salary sacrifice and contribute to their super, employers then ‘count’ that as their super guarantee payment for that worker – robbing them of their rightful entitlement.

This unfair exploitation has seen 370,000 workers who think they are doing the right thing lose‑out on super payments totalling $1.5 billion.

The data also coincides with new research conducted by UMR which reveals more than half of Australians polled incorrectly believe employers are required by law to pay super into a workers account at the same time as salary – meaning many will not even know they are being ripped off.

Only 19 per cent of Australians polled correctly identified that as many as one in three workers are currently being robbed of their super by their employer – proving the problem is a lot worse than people realise.

After being told that one in three workers are underpaid, or not paid super, a huge 93 per cent of Australians say that stopping unpaid super by paying it at the same time as salary is important.

Other key take-outs from the ISA analysis of the ATO 2016/17 data include:

  • Almost one in two young adults earning under $30,000 are underpaid superannuation;
  • More than 43 per cent of labourers, machinery operators and drivers have collectively missed out on more than $800 million making it to their super accounts in 2016/17; and
  • Combining these risk factors reveals 75 percent of Australians short-changed their super contributions are aged under 35, or earn under $30,000 or are in blue collar jobs.

Industry Super Australia Chief Executive Bernie Dean called on the major political parties to act on what can only be described as systematic exploitation.

“This should be a wake-up call for the major parties. We are now seeing the cumulative damage the unpaid super epidemic is doing to workers’ super balances and it’s very clear,” Mr Dean said.

“Allowing employers to continue robbing workers of their super entitlement means these workers are going to end up worse off at retirement.

“While most employers do the right thing, unless we see action from the major parties this election, those dodgy employers are going to continue taking advantage of lax laws, a weak regulator and insufficient penalties to rip off these hardworking Australians.

“The research shows Australians are rightly concerned about their super and the fact that so many people are missing out on their entitlements. They overwhelmingly believe stopping unpaid super is an important issue and that something needs to be done.”

Mr Dean said there was a simple fix the major parties could commit to this election that would solve the problem.

“The easiest way to end this exploitation and ensure workers are paid their super is to simply legislate that all employers must deposit money into a workers super account at the same time as they deposit their salary into their bank account,” he said.

“Anything else is nothing more than a band-aid solution that won’t fix the problem and will only see more hardworking Australians have their super entitlements stolen by rogue employers.”

The full report by Industry Super Australia into this latest data can be accessed at

/Public Release.