SMC urges Govt to resolve Australia’s “unpaid super scourge”

The Super Members Council (SMC) has released a new report on unpaid superannuation in an effort to urge the Australian Government to enact legislative reform and resolve the “$5.1 billion scourge”.

The report, titled Fixing unpaid super: Making super fairer for workers and employers alike, combined with SMC modelling found in the 2021-22 financial year 2.8 million Australians did not receive $5.1 billion from their employer in legal superannuation entitlements. Over nine years, Australians did not receive $41.6 billion in unpaid super.

Analysis conducted by the peak body on the Australian Taxation Office’s (ATO’s) two per cent sample tax file found those in insecure work, lower-income earners, migrants, women and younger workers were the most likely segments to be affected. Half of workers aged in their 20s earning less than $25,000 a year were likely to be underpaid their super.

The average affected worker was not paid $1,800 in super in a year, which would amount to over $30,000 less in retirement savings.

The SMC has urged the Australian Government to enforce super paid on payday, unpaid super recovery targets for the ATO, and provide support for workers to claim their unpaid super after business insolvencies.

“Paying super on payday will modernise the super system and should hugely reduce underpayments. It’s an excellent example of reform to benefit super fund members, which will make super fairer for workers and employers alike,” SMC chief executive, Misha Schubert, said.

“Unpaid super locks too many Australians out of the full transformative benefits of the retirement system and leaves people poorer when they retire. A unified push is needed to stamp it out.”

While the Government has previously committed to legislating payday super reforms by 2026, they are yet to be introduced to Parliament and have left an outdated payment system that allows super to be paid once a quarter instead of matched with paydays to continue.

The Government has also yet to action the ATO’s unpaid super compliance and recovery targets it pledged in 2022, leaving the agency to continue collecting an average of 15 per cent of national unpaid super a year.

“Legislation to pay super on payday, combined with a stronger ATO enforcement regime and better support for workers to claim their super after insolvencies, is crucial to ensure millions of Australians who are currently being short-changed are paid their super on time and in full,” Schubert said.

“We stand ready to work with the Government, Parliament and other key stakeholders to enact these pivotal reforms and ensure Australia fixes the stubbornly persistent unpaid super problem.”