Sneaky way your employer could be underpaying you
A superannuation industry body is calling for changes to how your super is paid.
A misalignment with how your super is paid has given some Aussie bosses a sneaky way to hide staff underpayments.
Industry Super Australia (ISA) has called on the Federal Government to mandate in the May Budget more frequent super payments to end multi-billion-dollar super rip-offs.
ISA said that, while most wages were paid monthly or fortnightly, super payments could be made quarterly, leading to the misalignment between the super payment seen on a payslip and the amount actually deposited into the super fund.
Also read: $300k superannuation boost for these Aussies
“Most employers do the right thing, but some bosses exploit the misalignment to hide underpayments from their staff – dudding their workers and gaining an unfair advantage over competitors in the process,” ISA said.
“The outdated law is the key reason workers have been underpaid a staggering $33 billion over seven years, losing an average of $4.7 billion in unpaid super each year.”
ISA said modernising the law to align the payment of super with wages in the upcoming Federal Budget would not only drastically reduce unpaid super rates, it would also boost the retirement savings of all the 4.2 million workers who were paid super quarterly.
ISA modelling found a 30-year-old earning the age-based median wage could be $8,000 better off at retirement if paid super fortnightly instead of quarterly.
ISA found that in 2019-20, 1 million women missed out on $1.3 billion, with a total of $10.8 billion lost over seven years. Women who were younger and on lower incomes were more likely to be impacted.
To lift retirement savings, ISA said the Government should:
Fix unpaid super: by mandating the payment of super with wages, increasing the ATO’s compliance activities, facilitating other actors to assist in recovery, include super in the National Employment Standards and extending the Fair Entitlements Guarantee to cover super in insolvency.
Improve the Your Future, Your Super reforms: by ending the gaming of the performance test, expanding the assessment to all fees and funds and including 10 years of historical fund performance.
Protect the fundamentals of the super system: by maintaining the legislated increases to the Super Guarantee and reflecting in legislation what the community thinks super is for – savings used solely as income in retirement.
Extend the super guarantee’s coverage: to allow ‘gig workers’ to be paid super.
ISA CEO Bernie Dean said, each year, Aussie workers were missing out on billions of dollars in super that they had earned, labelling it a “crushing financial blow”.
“At this Federal Budget, our politicians have an opportunity to end the huge super rip-off undermining the future economic security of many young women and others on lower incomes,” Dean said.
“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.”
Follow Yahoo Finance on Facebook, LinkedIn, Instagram and Twitter, and subscribe to our free daily newsletter.