Unpaid Superannuation Costs Australians Billions Annually

Many Australians are missing out on their rightful superannuation payments, leaving billions of dollars unrecovered. The authorities are failing to adequately penalize employers who don’t pay, creating a growing crisis for workers and their retirement savings.

Apprentice’s Unpaid Superannuation Illustrates Broader Problem

For over a year, the superannuation payments for Richard Aichinger’s son have been overdue. Despite reporting this to the Australian Taxation Office (ATO) at the start of the year, the issue remains unresolved. The young apprentice continues to receive assurances from his employer, but no payments.

Aichinger says his son has been told, “Yeah, they’ll be paying it soon.” Frustrated, the apprentice has not received any clear answers. The ATO’s lack of response has left Aichinger’s son feeling unheard, and worried about his financial future.

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“But being young and straight out of school, it’s something he shouldn’t have to confront and he probably feels a bit intimidated about even reporting it to the ATO — he’s a little bit concerned about job security.”

—Richard Aichinger

Recent data indicates that the ATO recovered just 17% of the $4.7 billion in unpaid super for 2020-21. This low recovery rate highlights the magnitude of the problem, where approximately $100 million owed to workers in superannuation does not make it into their accounts each week, according to recent industry analysis.

ATO’s Approach to Unpaid Superannuation Comes Under Fire

Misha Schubert from the Super Members Council says that the ATO needs to be more aggressive. The council has called for the ATO to strengthen its compliance measures and boost its recovery efforts to ensure that Australian workers receive their owed superannuation.

In 2020-21, the ATO issued 9,594 penalties for unpaid super. However, only 43% of these required the business to pay a penalty above the unpaid amount. Gabrielle Marchetti of JobWatch, notes that it is hard for people to pursue unpaid super, and the industries often cited are hospitality, construction, retail, and cleaning.

Potential Solutions on the Horizon

The introduction of “payday super” could help. This would require employers to deposit superannuation every payday instead of quarterly. Superannuation clearing house Wrkr CEO Trent Lund, believes it will lead to earlier detection of errors and reduce the risk to employees.

Payday super is designed to protect workers. “The frequency of pay is much faster, which means the errors will be detected earlier … so the risk to that employee is much, much less under payday super,” Lund explained.