Victorian workers suffer $1.2 billion super rip off

Victoria's workers are short-changed $1.22 billion a year from their super and the state's workers will continue to be ripped off until federal politicians act.

Industry Super Australia (ISA) analysis of the latest tax data shows more than 760,000 Victorian workers lost an average of $1,606 in 2018-19 (see table 1). Those swindled on super can end up retiring with up to $60,000 less.

In six years – from 2013-14 to 2018-19, Victoria's unpaid super bill climbed to an eyewatering $6.7 billion.

Despite nearly a third of the state's workforce suffering a super rip off each year, awareness of the unpaid super problem remains chronically low.

It can often take months for workers to uncover that they have been underpaid, making recovery far more difficult. Making matters worse 70% of workers don't realise super can legally be paid just four times a year, not with their wages – despite what it says on payslips.

The outdated laws and the lack of awareness amongst workers is being exploited by some unscrupulous employers to not pay super.

Mandating that super is paid with wages will make it much easier for workers to track when payments are made and uncover underpayments quicker, making recovery more likely.

An ISA report, Super Scandalous how to fix the $5 billion scourge of unpaid super and a community awareness campaign aims to help solve the problem that impacts three million people and provides practical tips on how to ensure workers are getting what they are owed.

But individuals can only do so much, it is up to politicians to fix the systemic underpayment of super by mandating all employers pay super into a workers' account when they pay wages.

Unpaid super creates an unequal playing field for businesses, as the employers doing the right thing are undercut by competitors who are ripping their workers off.

Workers must largely rely on the Australian Tax Office to recover their money as it is difficult to sue for super. But the ATO only recovers a dismal 12% of unpaid super annually and rarely issues penalties that would deter dodgy employers.

If the ATO is unwilling or unable to recover Victoria workers' savings the law should be changed so that employees, the Fair Work Ombudsman, and others acting on behalf of workers can.

To fix Victoria's $1.2 billion unpaid super scourge politicians should commit to:

Ø Mandating 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 if a company goes bust – at the moment super is not included.

Comments attributable to Industry Super Australia Chief Executive Bernie Dean:

"This is a $1.2 billion a year rip off affecting nearly a third of Victoria's workers, yet many of them remain unaware, assuming super is being paid because it appears on their payslip."

"Super is your money, you should get it paid at the same time you get your wages. By not mandating the payment of super with wages, politicians are stopping Victorian workers getting what they are owed."

"Our federal politicians get their super paid on payday, so should all Victorian workers."

Table 1: Unpaid super by Victorian federal electorate

Source: ISA analysis of 2018-19 2% ATO tax file and ABS data.