1 in 3 workers are the victims of unpaid super, with industry groups estimating $5.6 billion of super payments are not paid each year.
Industry Super Australia estimates that $5.6 billion of super payments are not paid every year, with 32% of workers affected – or one in three people. This is a massive problem that’s costing Australians significantly in their retirement, and it’s largely going undetected due to various quirks with how the superannuation system is setup. But there are ways to detect whether you’ve been underpaid your super entitlements, and also an automated process for reporting dodgy employers.
Why is unpaid super going undetected?
One of the main reasons superannuation theft flies under the radar is that it’s not as visible as wages. While wages are anticipated (and often spent well in advance of it hitting our bank account!), super sits in a different fund that we don’t check on a regular basis. Indeed, many super funds only send member statements once a year.
The other key reason is due to the way superannuation is paid. As with tax, employers are only required to pay super quarterly, so even if your payslip specifies an amount has been paid to your super fund, it may not actually go into your account until several months later.
What is the amnesty that employers have been given for unpaid super?
A bill was passed this week that gives employers a one-off amnesty for non-compliance with their superannuation obligations.
If employers voluntarily (ie without prompting from the ATO) come forward and self-report any unpaid super owing to workers between 1 July 1992 through to 24 May 2018, then penalties and administration fees for non-payment will waived – although they will be required to repay outstanding super entitlements to workers with interest.
This amnesty period will last for six months, after which employers who are found guilty of unpaid super will face fines of up to double their unpaid entitlements.
With all businesses in Australian now reporting their payroll in real-time to the ATO using the new Single Touch Payroll system, there is now greater visibility and transparency with super payments, and it’s expected that the ATO will be far more rigorous with enforcing Super Guarantee obligations once the amnesty period is over.
How do I detect unpaid super?
The first thing you need to be clear on is what your superannuation entitlements are. If you’re earning $450 or more per month with a single employer, then you’re entitled to receive a minimum of 9.5% of your wage into your designated super fund. However, some employers pay more than the minimum rate.
Your monthly payslip should stipulate what your super payment is, although it’s worth noting that just because a super payment has been noted on your payslip, it doesn’t mean your employer has actually paid it. Employers only have to pay super to their workers quarterly, so what often happens is that they withhold super payments and only pay them every three months.
The best way to check whether you’ve been paid your correct super entitlements is by checking directly with your super fund. Armed with knowledge of how much you’re entitled to as a percentage of your salary, you should be able to figure out how much you should have in your fund at a minimum (obviously, the returns you receive every year on your super should make that total amount higher).
Some super funds have additional features that enable you to keep better track of your super beyond the annual member statements – FairVine Super, for instance, sends a text message to its members every time their employer makes a super contribution.
What do I do if I have unpaid super entitlements
If you discover you’ve been underpaid your super entitlements, your first port of call should be your employer. It may have been a genuine oversight, in which case you should make arrangements with them to repay the shortfall. Make sure you document these interactions with your employer as well, because if they’re unresponsive, you will need to seek help from the ATO, which has an online tool for reporting unpaid super contributions from your employer.
Where can I find out more about unpaid super?
FairVine Super is extremely passionate about driving greater awareness around the issue of unpaid super. It's an insidious problem that's robbing Australians of their hard-earned retirement money, and it's flown under the radar for too long now. Sangeeta Venkatesan, FairVine Super's Executive Chairman, spoke to Nestegg at length about how the new amnesty works and how greater transparency is required. Head of Customer Experience Rachel Hamlen also spoke to Yahoo Finance about how Australians can spot superannuation theft and what to do if you discover missing money.