Calls for super overhaul to stop underpayment

Yasmine Raso

Senior Journalist, Financial Newswire

31 January 2023

Industry Super Australia (ISA) has called for the Federal Government to mandate the payment of superannuation in alignment with wages, after new analysis revealed workers have been underpaid super by $33 billion over seven years.

More frequent super payments accounted for in the May Budget would reduce the rate of $4.7 billion in unpaid super per year and would lift the retirement savings of over four million workers who are paid super quarterly.

“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,” Industry Super Australia chief executive, Bernie Dean, said.

“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.

“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.”

ISA modelling found a 30-year-old earning the age-based median wage would have $8,000 more in retirement if they were paid super fortnightly instead of quarterly, due to contributions compounding for longer when paid more frequently.

Analysis from the association also showed that one million women missed out on $1.3 billion in the 2019-2020 financial year, with a total of $10.8 billion lost over seven years.

“Super has been a boon for millions already but it’s not perfect and there are long-standing issues that the government needs to address to make sure that more women, gig workers and low-income earners get a fairer go,” Dean said.

“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.”