Unpaid super is costing Australian workers, and costing them big.
Would it bother you if your weekly or fortnightly pay was consistently 10% short? Once you noticed, would you do something about it? If you’re like most Australians, the answer would be a resounding “Yes!”. Here’s the scary part: this is exactly what is happening to millions of Australian workers.
So, what’s the cause? It’s employers who underpay workers’ superannuation entitlements.
How Does Superannuation Work?
Superannuation, or super, is a pretty simple idea, and it’s great for workers. In the early 1990s, the Australian Government made it law that employers have to take a percentage of an employee’s ordinary earnings and pay it to a separate retirement savings account called superannuation. Employees can’t access the funds until they retire, which means that all of our super accounts grow over decades.
Your superannuation money is invested on your behalf by your super fund, in a whole range of investments like shares, cash and property. Your super fund should work toward one objective: to grow your money, for your retirement.
The superannuation guarantee is currently 9.5%. That means that for every $1,000 you earn, an extra $95 is paid by your employer, into your superannuation account. Over the course of a year, a decade and your whole working life, these numbers really add up and as a result, some Australians are increasingly well prepared for retirement.
For example, a 30-year-old earning $60,000 a year and working until the retirement age of 65 with a standard ‘growth option’ superannuation account will have about $247,700 when they retire!
The Billion-Dollar Question: Are employers paying the required super contributions?
When you multiply numbers like that across the whole Australian working population it becomes pretty clear that superannuation is a billion-dollar industry. But this billion-dollar industry is also hiding a billion-dollar problem.
Millions of Australians might be missing out on their fair share of superannuation – and you might be one of them.
In fact, a recent Guardian article cited evidence provided to an Australian Senate inquiry that said an eye-watering 2.7 million Australian workers were being short changed thousands of dollars per year in unpaid superannuation. This can easily add up to hundreds of thousands of dollars in retirement money for each person affected.
How Can Unpaid Super Happen?
Employers pay superannuation at the end of every quarter to their employees’ superannuation fund. But unlike weekly pay, superannuation is often not closely watched by an employee, because it does not affect their take-home pay. Therefore, when an employer doesn’t make their legally required superannuation payments to their staff, it’s hard to spot.
These late or missing payments by employers can occur for many reasons. They include:
- Innocent mistakes,
- Poor administration due to busy periods, employee growth or inadequate systems,
- Cash flow problems leading to an inability to meet superannuation obligations, or
- Deliberate avoidance of superannuation obligations
Regardless of the reason, the result is the same – workers are underpaid and don’t receive the super money they are entitled to. The average level of underpayment is reported to be $2,025 each year for over two and a half million Australian workers. If you take that level of underpayment and apply it to our example above, it’s shocking how much your retirement nest egg shrinks.
The $247,700 in our example above, minus a $2025 underpayment, falls by almost $100,000 to $157,700. That’s not good.
So what can you do to find out if your superannuation is being underpaid?
Unpaid Super is different to Lost Super.
Unpaid super is money that you earned and deserve, that should be paid into your super fund by an employer, but wasn’t.
Lost super generally means, super accounts that you might have forgotten about or didn’t know about. After a long time, the ATO will take the money out of those accounts. Worse, those accounts can contain lots of money being eaten away by duplicate fund fees or insurance policies, which can reduce your retirement savings. You can read more here about how to find lost super.
How to Find Your Unpaid Super
It’s a quick two-step process to check if you’re superannuation payments are correct.
- Check your regular pay slip or end-of-year payment summary. It should contain a separate section that shows how much has been contributed to super on your behalf. All you need to do is take your ordinary salary and multiply it by 0.095 (which is 9.5%). The superannuation contribution figure listed on your payslip or PAYG payment summary should be very close to the number you calculate.
- Next, find your most recent superannuation fund statement and check — do the amounts deposited to your account match the amounts listed on your payslips or payment summaries? (If you can’t find your super account account details, your employer is required to have them and provide them to you on request.)
So, what if the numbers at step one or step two above don’t match?
Help! I Think My Super Has Been Underpaid!
The first and simplest thing to do is to contact your employer and see if they can explain the difference. In most cases your employer will want to remedy the situation. Don’t get too excited or make accusations at the start. Just talk it out and see what you learn. Remember, it’s your money. But employers are people too. Work it through.
However, if your employer is unhelpful, the Australian Taxation Office (ATO) can investigate unpaid super. If you think you were underpaid, contact the ATO for help.
They will look at your claim and investigate on your behalf. Getting the ATO involved is a positive step for employees, as businesses are far more likely to take the complaint seriously when they are being formally investigated by a Government authority. (But, most of us shouldn’t start an ATO investigation until we talk to our employer and learn all the facts.)
The ATO will manage your request to investigate and keep you updated, but don’t hesitate to call for regular updates to find out the status of your case.
Your super is YOUR Money!
At the end of the day, superannuation is your money. You earned it over the course of your employment. Superannuation is money that you are legally entitled to and it can make the difference between a tough retirement and a comfortable one. Don’t let yourself be thousands of dollars worse off in retirement due to unpaid or underpaid super. Check your balance today – it could be the best investment of ten minutes that you ever make.