More than a quarter of Australian workers are owed a total of $5 billion in unpaid super, a new industry report claims

More than a quarter of Australian workers are owed a total of $5 billion in unpaid super, a new industry report claims
More than a quarter of Australian workers are owed $5 billion in unpaid super, a new report shows, prompting renewed calls for tougher regulation. Photo: Getty
  • A new report from Industry Super Australia found that more than a quarter of the Australian workforce is owed more than $5 billion in super.
  • About one third of them were under the age of 30, with those working low-income jobs the worst affected.
  • Natasha Panagis, head of superannuation at Tax & Super Australia, said the only deterrent the government has in place is a late payment penalty, which in many cases doesn’t do enough to solve the problem.
  • Visit Business Insider Australia’s homepage for more stories.

The Morrison government is facing pressure to establish stronger regulatory guardrails to ensure employers pay the Super Guarantee, following the release of a new report detailing extraordinary super underpayments across the country. 

Industry Super Australia released superannuation analysis of the 2018-19 financial year on Thursday that found more than a quarter of the Australian workforce were underpaid a total of $5 billion in super for that year alone. 

The $5 billion in unpaid super brings the total super debt of Australian businesses to an “eyewatering” $28.8 billion, a figure that ISA chief executive Bernie Dean expects will only continue to bloat in the absence of material policy action. 

“This is a $5 billion a year rip off on a quarter of Australia’s workers that politicians are refusing to fix,” Dean said. 

“Super is your money, you should get it paid at the same time you get your wages,” Dean said. “By not mandating the payment of super as wages, politicians are stopping millions getting what they are owed.”

ISA’s analysis came to form part of a new report also released on Thursday, called “Super Scandalous: how to fix the $5 billion scourge of unpaid super”,  which offered four key policy recommendations the Morrison government could adopt to curb super theft. 

Among them was a mandate that would force employers to pay the super they owe their staff on payday. As it stands, employers are only required to pay their workers’ Super Guarantee every quarter. 

Natasha Panagis, head of superannuation at Tax & Super Australia, told Business Insider Australia that the only deterrent the government has in place is a late payment penalty, which in many cases doesn’t do enough to solve the problem. 

“Whether that actually deters employers from underpaying super, or paying it on time — I don’t think so,” Panagis said

She said a lack of oversight often compounds the issue, allowing businesses to go long periods of time without any reprimand at all, until the employees of one business group together, and report their super underpayments to the ATO. 

“And you know, in the end, maybe [they’ll] pay a bit of an interest charge,” Panagis said. “But it still doesn’t deter someone from doing the wrong thing. I definitely think there should be some stricter penalties in place.”

Like the ISA, Panagis said mandating super payments on payday would go a long way to tapering super underpayments in Australia, assuming that some proportion of employers aren’t aware they’re doing the wrong thing. 

“It would be a more efficient and cleaner process if employees could get paid their super guarantee every paycheck, whether that’s fortnightly or monthly,” she said. “And that way, whatever’s on their payslip is actually getting paid at that payment frequency.”

It’s a sentiment shared by Dean, who said that if federal politicians get their super paid with their wages, the rest of the Australian workforce should too. 

“Most employers are doing the right thing, but they are being undercut by competitors who are getting away with daylight robbery,” he said. “Paying super with wages is the only way to get workers their money and level the playing field for business.”

Another of the report’s recommendations was that the ATO go to greater lengths to crack down on unpaid super. According to the report’s modelling, the ATO only manages to recover a “dismal” 12% of unpaid super every year. 

For the 2018-19 financial year alone, the rate of super underpayment was particularly high. ISA found that almost 1.7 million men and 1.3 million women fell victim to super underpayments, at a cost of $3.4 billion and $1.6 billion respectively. 

About one third of them were under the age of 30, with those working low-income jobs worst affected. Half of those earning less than $25,000 missed super payments altogether, while 30% of those earning between $25,000 and $50,000 were underpaid to some degree.

ACTU assistant secretary Scott Connolly supported the report’s recommendations, which he said could offer some security to the nation’s most vulnerable workers who are also bearing the brunt of an increasingly casualised workforce.

“Insecure workers are some of the most exploited by their employers,” Connolly said. “The Morrison Government must stop employers Uberising our workforce.”

“Workers and their union representatives must be empowered to recover stolen super by putting superannuation into the National Employment Standards.”

“Additionally, workers cannot claim their lost superannuation if a company goes bust. It is unfair that workers have to pay for the failures of their employer — this must change.”