Billions lost in unpaid super - is some of it yours?

While the vast majority of employers do the right thing, the ATO said unpaid contributions added up to $2.85 billion.

Each year, billions of dollars of workers’ super contributions go unpaid, and the Tax Office is cracking down on employers who dodge their compulsory super obligations.

The vast majority of bosses – 95%, do the right thing and pay their employee super contributions. The 5% that don’t may not sound like much but the Tax Office says unpaid super contributions added up to $2.85 billion in 2014-15 alone. That’s a lot of money that should be going into workers’ retirement nest eggs.

One behind unpaid super contributions is the so-called black economy. Workers in some industries may, for example, be encouraged to receive their wage as cash in hand. This can sound tempting but it means missing out on employer-paid super.

Bear in mind, you can earn up to $18,200 annually or about $1,517 per month before tax applies. On that income, your employer would be responsible for monthly super contributions of $144, which can add up over time. So think twice before agreeing to be ‘off the books’.

Another danger zone is ‘sham contracting’. This is where the boss hires you as a contractor to avoid paying compulsory super (and other regular entitlements), when in fact you’re really working as an employee.

The Fair Work Ombudsman (FWO) is warning about sham contracting, saying that giving the boss an ABN (Australian Business Number) doesn’t necessarily make you a contractor. If you work regular hours on an ongoing basis under the direction of your employer, you could be regarded as an employee and entitled to employer-paid super. If you’re unsure about your situation, check out the Fair Work Ombudsman website for more details.

Importantly, all workers should review their super account regularly to see that employer contributions have been paid. Sure, the contributions may be listed on your pay slip but that doesn’t always mean the money has been deposited into your fund.

Business failures account for the bulk of unpaid contributions, and many people don’t realise their super hasn’t been paid until their employer has gone belly up. By that stage it’s a lot harder to chase down outstanding super contributions. So make a habit of checking that you are receiving your super entitlements at 9.5% of you regular wage or salary.

If it looks like you’re being short-changed, speak with your employer immediately. If you’re not happy with the response, get in touch with the Tax Office on 13 10 20. Each year the tax man looks into around 20,000 complaints about unpaid employer contributions, and businesses that get caught out can face penalties as high as 200% of the unpaid super. For anyone who runs a business with employees, that makes keeping on top of staff super contributions a matter of priority.

 

Paul Clitheroe is a founding director of financial planning firm ipac, Chairman of the Australian Government Financial Literacy Board and chief commentator for Money Magazine.

Find your lost super

When you change jobs or move, your super fund can lose contact with you. Wherever your super happens to be, we can find it for you.

Search now

Outstanding value with
AMP Flexible Super

With five stars for outstanding value from CANSTAR, you can feel confident with Australia’s favourite for super^.

Learn more

Understanding super

Our short online learning module explains what super is, and how you can make contributions and grow your super savings over time.

Begin module

Sign up to News&insights

Sign up to News&insights for a chance to win an iPhone 7 (PRODUCT)RED™ Special Edition.

Sign up now

Recommended articles

Important information

Show more

It’s important to consider your particular circumstances and read the relevant Product Disclosure Statement before deciding what’s right for you. This information is general in nature and hasn’t taken your circumstances into account. 

This information is provided by AMP Life Limited. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relation to products and services provided to you. All information on this website is subject to change without notice.  

The issuer of AMP Flexible Super is AMP Superannuation Limited ABN 31 008 414 104. 

Although the information is from sources considered reliable, AMP does not guarantee that it is accurate or complete. You should not rely upon it and should seek qualified advice before making any financial decision. Except where liability under any statute cannot be excluded, AMP does not accept any liability (whether under contract, tort or otherwise) for any resulting loss or damage of the reader or any other person.

AMP Flexible Super – 2016 winner for outstanding value by CANSTAR Superannuation Star Ratings Report. 

^ Favourite for super – largest market share by assets under management at aggregate level for retail super. Plan for Life, Marketer View – Retail managed funds, June 2017.