An outdated law is the key reason workers have been underpaid a staggering $33 billion over seven years, which has also resulted in an average of $4.7 billion lost in unpaid super each year with calls for a crackdown on the issue.
Industry Super Australia (ISA) is calling for the federal government to mandate more frequent super payments to end Australia’s multibillion-dollar unpaid super rip off – moving from payments quarterly to every fortnight.
This could help tackle scandals of unpaid and underpaid superannuation that affects millions of Aussies a year.
The move could also boost the super funds for millions of Aussies with new analysis showing that a 30-year-old earning the age-based median wage could be $8000 better off at retirement if paid super fortnightly instead of quarterly.
This would also contributions to attract interest for a longer period of time if paid more frequently.
“Because superannuation can legally be paid quarterly, there can be a misalignment between the super published on a pay slip and the amount deposited in the account,” ISA said in a submission to the federal government.
“Some bosses exploit the misalignment to hide underpayments from their staff, dudding their workers and gaining an unfair advantage over competitors in the process.”
It noted some employers use superannuation to manage their cash flow and accumulate large unpaid super liabilities ISA said in its pre-budget submission before the budget is delivered in May.
Each year Australian workers are missing out on billions in super that they’ve earned, which is a “crushing financial blow for them and their future”, said Industry Super Australia Chief Executive Bernie Dean.
“At this federal budget our politicians have an opportunity to end the huge super rip off undermining the future economic security of many young women and others on lower incomes,” he said.
“Aligning payment of super and wages is the right thing to do by workers, boosts government revenue, lifts investment returns and puts all employers on a level playing field.
“Super has been a boon for millions already but it’s not perfect and there are longstanding issues that the government needs to address to make sure that more women, gig workers and low-income earners get a fairer go.
“Out on the street people know that super is money that you save for your retirement, and it is this simple notion that should be reflected in any laws designed to protect their financial interests.”
Dealing with unpaid super would also put billions back into the retirement savings of millions of women, the ISA analysis found.
In 2019-20, one million women missed out on $1.3 billion in super, with a total of $10.8 billion lost over seven years – with females who are younger and on lower incomes more likely to be impacted.
It also called on the government to pay super on the Commonwealth Paid Parental Leave Scheme to tackle inequality when it comes to superannuation and increase the Low-Income Superannuation Tax Offset to account for changes to tax brackets.
The lobby group also said there should be an extension of mandatory super to gig workers and contractors.
“Despite having a world-class retirement saving system, some workers including those in the gig economy are not sharing the benefit because they are not entitled to receive the super guarantee,” ISA said in its submission.
“This has a profound impact on how much money a worker has in private savings when they retire, which affects whether they can achieve a dignified retirement and the extent to which they need to rely on the age pension.”