Government cracks down on unpaid super

If you’re one of the 3 million Aussies who have been shortchanged on super contributions, you’re in luck.

Legislation is being introduced by Financial Services Minister Kelly O’Dwyer that will prevent companies from reducing the amount of superannuation contributions they pay workers if they choose to salary sacrifice.

These amendments will also force employees to pay back workers their full superannuation entitlements.

The move has come following a Freedom of Information request by The Australian that revealed a confidential interagency report into billions of dollars’ worth of annual unpaid super.

This has forced the federal government to immediately act, pledging to move on a recommendation contained in the report that will prevent businesses reducing the super entitlements they contribute for workers who choose to salary sacrifice.

These amendments come at an ideal time, as in December 2016, Industry Super Australia and Cbus Super released a report predicting that if this was not resolved, the rate of unpaid superannuation would reach $66 billion by 2024.

The report also calculated that a staggering $3.6 billion in retirement savings is being lost, and 2.4 million Aussies are affected annually.

Am I being paid less super?

Employers are legally required to pay 9.5 per cent of ordinary time earnings in superannuation towards every employee over the age of 18 earning more than $450 a month. This is the super guarantee.

Under the current Superannuation Act, there is no distinction between contribution from ­salary sacrificing or an employer contribution. This means that companies can either count the salary sacrifice as part of their own payments, or calculate your 9.5 per cent super guarantee payments at the post-sacrifice salary level.

Industry Super Australia isn’t convinced

In a press release issued today, Industry Super Australia’s public affairs director, Matt Linden, stressed that this will only help one in 10 affected by unpaid superannuation, and greater urgency and a more comprehensive approach is needed.

“Amending the law to require employers to pay super more frequently – at least monthly but ideally at the same time as wages – is essential to stop super payments being used for business cash flow.

“Also essential is a policy decision from government to include small businesses in Single Touch Payroll to enable real-time tracking of payments, and collection of ordinary-time earnings data to verify amounts paid are correct.

“Without taking these extra steps, millions of Australians will continue to be shortchanged billions in super, with the Government having to pick up the tab with higher age pension costs,” said Mr Linden.

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