Yahoo Finance The legal way employers can take $12K from your pocket
Getting paid weekly, fortnightly or monthly can make a big difference to savings and cash-flow.
But employers’ decisions about when to pay superannuation can be just as – if not more – important to Australians’ financial health, new research has revealed.
Australian savers have lost $225 million in interest on super savings due to laws allowing superannuation to be paid quarterly, rather than fortnightly, Industry Super Australia (ISA) analysis of Tax Office data has found.
For a person working full time on average wages from 20 to 67, the lifetime gain of fortnightly, rather than quarterly, superannuation payments would be $12,475 in interest.
The analysis found that in 2015, workers aged 20-29 lost out on $25 million in interest, while Australians aged 40-49 lost $55 million and those aged 50-29 lost $50 million.
ISA chief executive Bernie Dean described the laws as “absurd” and called on the government to synchronise superannuation payments with wage payments.
“Essentially, workers are subsiding businesses at the expense of their retirement savings,” he said.
“Every penny counts in retirement, and this interest could be the difference between having enough and going without.
“It’s not fair, and the rules must change.”
ISA explained that while pay-slips may record super entitlements, they don’t necessarily confirm the payment. And according to ISA polling, 70 per cent of workers aren’t aware of this.
“We’ve welcomed any and all efforts to improve compliance, but it won’t change the fact that some employers will go on using the payment hiatus for business cash flow,” Dean said.
ISA analysis also warned that the four month initial gap between starting a job and receiving the first superannuation payment means workers lose interest in tracking their super, estimating that timely contributions would improve superannuation balances by another $600 million.
Make your money work with Yahoo Finance’s daily newsletter. Sign up here and stay on top of the latest money, news and tech news.
Now read: Warning: Don’t get caught in this investment trap
Now read: PICTURES: Just $82 will buy you a slice of this Perth house
Now read: The body language signs to look out for in a job interview