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Kate thinks she was underpaid $2k in super. She’s not alone

·5-min read
Kate Edwards has been chasing up super she believes was unpaid for more than two years. (Sources: Supplied, Getty)
Kate Edwards has been chasing up super she believes was unpaid for more than two years. (Sources: Supplied, Getty)

It’s been more than two years since Kate Edwards asked the Australian Tax Office (ATO) to track down her unpaid super, and she’s beginning to lose hope.

The 26-year-old marketing worker believes a former employer failed to pay her around $2,000 in superannuation.

“There’s not a whole lot sitting in my super account, and I had to have a big surgery at the start of the year where I needed to access my super, but I didn’t even have enough,” she told Yahoo Finance.

She lodged a complaint with the ATO in June 2019 when she realised the issue.

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The ATO told her that they had contacted the employer, who said they would pay it back, and as such the case was considered closed, Edwards said. 

Several months passed and the money hadn’t landed in her account, so she lodged a second complaint. Again, the employer failed to pay, so Edwards launched another complaint.

WATCH: Tips for a successful retirement.

“This is getting into COVID-19 time, so it did make it a lot more difficult,” Edwards conceded.

But now Edwards is concerned the company has entered liquidation, and she’ll never get the money back.

“I’m not even angry at the ATO because they probably are doing what they can, but [I’m angry] at the company because it’s like they don’t care about the rules,” she said.

“I don’t think it’s going to happen, but I’m going to take it as far as I possibly can, whether that’s getting a lawyer to write something out or hiring a debt collector.”

However, she admits she’s already running out of steam.

“The time that it’s been in my head - the amount of stress and frustration that I get at random times throughout the day, throughout the year - it’s just all-consuming sometimes.”

Unpaid super costs average worker $60,000 by retirement

Kate's story is not unusual, according to ISA analysis. (Sources: Getty, Supplied)
Kate's story is not unusual, according to ISA analysis. (Sources: Getty, Supplied)

As many as one in four Australian workers have unpaid super, new analysis released by Industry Super Australia (ISA) on Thursday has revealed.

On average, that’s 3 million workers every year who have not received $5 billion in superannuation.

Individually, these workers are underpaid $1,700 in super, but by retirement, the foregone gains on that super can add up to $60,000 less.

It’s a problem that’s worse for Australia’s lower-income earners, with the ISA analysis finding that half of those earning less than $250,000 have unpaid super.

“Kate’s experience happens all too often, and all too common,” ISA CEO Bernie Dean told Yahoo Finance.

“People should be able to look at their payslip and be confident [that super has been paid].”

19,000 Aussies take complaints to ATO, more than 4,000 in queue

The ATO is working to improve its unpaid super processes, but there are still thousands in the queue. (Source: Getty)
The ATO is working to improve its unpaid super processes, but there are still thousands in the queue. (Source: Getty)

The ATO received 19,000 employee complaints about unpaid super last year and raised $880 million in liabilities, ATO deputy commissioner of superannuation Emma Rosenzweig told Senate Estimates on Wednesday evening.

There remain around 5,000 on hand for review, added ATO client engagement commissioner Jeremy Hirschhorn.

“Our challenge often is that we can say, ‘Yes, there was super payable’, but if the company has since gone bankrupt, there may be no way of accessing that super. If the company is still in existence, we seek to pursue the super,” he said in response to questioning by Senator Rex Patrick.

“We have service standards that say that we want to action a certain number [of complaints] within time periods.

“This last year with COVID, there has been some disruption. We have now driven down the outstanding notifications to less than 5,000 and are really driving through to historically low levels.”

Delays in money flowing through can also occur if the employer fails to respond to the ATO’s request for payment or doesn’t adhere to the repayment plan.

And if the ATO needs to take legal action, that will also lead to delays, an ATO spokesman told Yahoo Finance.

Employers found to have failed their super obligations are liable for penalties of up to 75 per cent of the unpaid super. The ATO may also come after a current or former company director for non-payment.

An amnesty period for employers to pay unpaid super without these penalties closed on 7 September 2020 and led to 28,300 employers paying $850 million. Around 692,200 workers will benefit from that.

Of the unpaid super disclosed, $796.1 million has been paid, while $62.3 million is in payment plans.

Legal change the only solution

Paying super on payday is part of the solution. (Source: Getty)
Paying super on payday is part of the solution. (Source: Getty)

While it’s easy to criticise the ATO for being too slow to act, and too weak upon acting, it’s ultimately the law that needs to change, Dean said.

As it stands, employers aren’t required to pay superannuation on the same day as they pay wages and salaries. That means it’s much easier for employers to avoid paying the money.

“[Unpaid super] should not be the ATO’s problem to fix. They should be about tax, not about chasing super,” he said.

“The most obvious, sensible way to fix this problem is for the law to require employers to pay superannuation into workers’ accounts on payday.”

Most companies are doing the right thing, he added, but that’s small comfort for workers whose bosses aren’t.

“Employers who are currently exploiting some pretty lax laws - and some pretty weak enforcement - they are taking advantage of these things and leaving workers like Kate behind,” he said.

“Most employers that we speak to are supportive of payday super, and it’s because they know that those few bad apples are undercutting them.”

Until super is paid on payday, Dean worries that stories like Edwards’ will continue to occur.

“I do not know how long it will take the ATO to chase down unpaid superannuation, but I would recommend that not one person hold their breath.”

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