A national body has asked the Australian Tax Office (ATO) and politicians to do something to overhaul super contributions in Queensland, as new research is showing that the state’s cumulative unpair super debt has climbed past $5 billion in recent years.
According to Industry Super Australia’s (ISA) analysis of tax data, more than 570,000 Queensland workers were not paid $940 million in super, losing an average of $1,600 in 2018/19.
The ISA’s new report, titled “Super Scandlous: How to Fix The $5 Billion Scourge of Unpaid Super”, highlighted that in six years, the state’s cumulative unpaid super debt has climbed to $5.5 billion. The research found young Queensland workers and those on lower incomes are most likely to be underpaid.
Commenting on the findings, ISA chief executive Bernie Deansaid the issue needs urgent addressing by the ATO and politicians alike.
“The report’s key recommendation for fixing the unpaid super scourge in Queensland is to mandate all employers pay super into a workers’ account when wages are paid. Not paying super with wages makes it difficult for workers to keep track of their money and allows payments to fall through the crack. Federal politicians have known about this solution for years but have failed to act,” says ISA chief executive Bernie Dean.
“Unpaid super creates an unequal playing field, as the employers doing the right thing are undercut by competitors who are ripping their workers off. Workers must largely rely on the Australian Tax Office to recover their money as it is difficult to sue for super, but it only recovers a dismal 12 per cent of underpayments annually and rarely punishes dodgy bosses. If the ATO is unwilling or unable to recover Queensland workers’ savings the law should be changed so that employees, the Fair Work Ombudsman, and others acting on behalf of workers can,” continued Bernie Dean.
The report mentioned four measures it encouraged politicians to adopt to address the issue.
The first measure is to mandate super payment at the same time as wages. The second measure is to lift enforcement activity and force the ATO to issue and publicise penalties for not paying super so dodgy employers can see there is a cop on the beat.
The third measure is to empower employees and representatives to recover unpaid super debts, and the fourth is to extend the Fair Entitlement Guarantee “so workers can recoup their savings if a company goes bust”.
“Super is your money, it should be paid at the same time as wages. By not mandating the payment of super with wages, politicians are stopping millions getting what they are owed. Our federal politicians get their super paid on payday, so should all Queensland workers. Most employers are doing the right thing, but they are being undercut by competitors who are getting away with daylight robbery. Paying super with wages is the only way to get workers their money and level the playing field for business,” says ISA chief executive Bernie Dean.
Australians are being urged to do one thing that has the potential to boost their super by tens or even hundreds of thousands of dollars.
Australians are being encouraged to check if their super accounts are performing this year, after a comparison tool launched five months ago reached the milestone of one million hits online.
Superannuation Minister Jane Hume said the online resource, which was launched in July, held super funds to account and named and shamed underperformers.
“Australians work hard to earn their wages, and of course superannuation is deferred wages. We will always put Australians first, not fund managers,” said Superannuation Minister Jane Hume.
Thirteen MySuper products failed the Government’s new bright line performance test covering a million-member accounts.
The MySuper comparison tool enables Australians to compare their super fund against other default products on an apples to apples basis.
“The fees you pay today can mean tens or even hundreds of thousands of dollars difference in retirement. As Einstein observed, compound interest is one of the most powerful forces in the universe- a small change in your super today can have very lucrative pay-offs many years down the line,” said Superannuation Minister Jane Hume.
The online tool illustrates that for a person aged 30 who has $70,000 worth of super there are nine funds which “underperform” based on information supplied by the Australian Prudential Regulation Authority.
One of the super funds was Maritime Super, a fund that was charging $1010 a year, according to the website, while giving a person a seven-year net return of 7.13 percent.
Energy Industries Superannuation Scheme was also classified as underperforming, charging $623 with a net return of just 5.96 percent.
Meanwhile, on the other hand, “performing” account UniSuper charged an annual fee of $418 and had a net return of 9.17 percent over seven years.
Australian Super charged $586 but had a net return of 9.41 percent.
The team at C&D Restructure and Taxation Advisory are here to help. As part of the Vault Group we can offer the full suite of financial products and advice to help you navigate the business landscape. Schedule a meeting here via Calendly or give us a call on 1300 1 VAULT (1300 182 858)
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