Is your employer underpaying your super? Aussies reportedly owed billions

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Super is a fact of working Australian life, much the same as death and taxes. However, new research from Industry Super Australia (ISA) reveals that a legal loophole has cheated Aussies out of billions in unpaid super – and why it’s critical your super should come with your paycheck.

How employers should pay super

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According to the Australian Taxation Office (ATO), nearly every employee in Australia over age eighteen is legally entitled to superannuation payments from their employer, no matter if they’re full-time, part-time, temporary, or casual. (Some exceptions apply, such as domestic workers with less than 30 paid hours a week, but these are few and far between).

The government sets employer contributions to your super at 11% of an employee’s income (as of July 2023) as part of a standard benefits package. Contributions must be paid at least quarterly, though many employers have started including super in monthly pay checks.

But this is the kicker: because they can pay quarterly, some employers have taken advantage of the delay to shortchange their workers. ISA notes that if super is paid more frequently these contributions can compound for longer resulting in a more substantial nest egg over time.

As a result of this issue, ISA estimates that Australians have lost out on $33 billion in unpaid super over the last seven years, or $4.7 billion per year. In 2019 - 2020, this staggering shortfall worked out to about $1,740 per affected employee, which while relatively small compared to a minimum wage could seriously dent someone’s long-term retirement prospects over time.

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This lost super especially affects women, as well, who already retire with two-thirds of the savings that men do. The ‘super gap’ can result from taking parental leave or working less well-paying jobs in general, but ISA reports that unpaid super is a nasty factor. 

Over 2019 - 2020, one million Australian women lost out on $1.3 billion in super contributions. This particularly impacts young and low-income women.

Could the 2023 federal budget bring new super legislation?

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ISA asserts that ending the quarterly payment loophole in the May 2023 Federal Budget could help stop the exploitation of workers, enshrining protections for the most vulnerable Aussies into law. 

“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,” explains ISA chief executive Bernie Dean.

“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.”

If you’re unsure about whether your super payments are up to scratch, you can use the ATO’s super calculator tool to see how much you’re owed.

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