If you’re enjoying some down-time over January, it’s worth taking a few minutes to check your super savings. It’s a simple step that could leave you a lot better off further down the track.
Most employers do the right thing and make regular compulsory super contributions for their employees. However, some do not, and a recent industry report found almost one in three Australian workers could be out of pocket because their employers have skipped all or part of their compulsory super obligations.
Non-payment of employee super contributions is not new. What’s surprising is the scale of the problem. It’s estimated rogue employers are collectively dodging compulsory superannuation payments worth $3.6 billion each year. Young workers under the age of 30 are most likely to be ripped off along with workers in the hospitality, construction and cleaning industries where casual employment is common.
The average amount of unpaid super is believed to be $1,489 for each worker affected. That may not sound like much but super is an ultra-long term investment that really benefits from compounding returns. Missing out on just a few contributions today can have a significant impact on the value of your final nest egg.
And here’s the rub. Unless you keep track of your super savings it’s easy to be unaware that the boss is ducking out of paying compulsory contributions. This explains why checking your fund balance several times a year is a good investment of your time.
If you’re not sure where to start, take a look at your pay slips. These will show the amount of super the boss is required to pay, which should work out to 9.5% of your ordinary (not overtime) earnings if you’re aged over 18 and earn more than $450 in a month.
Next, check your super fund statements to see exactly what’s been paid into your account. Bear in mind, super contributions only have to be paid quarterly even if your wages are paid weekly or fortnightly. This means there can be a delay of several months between contributions being recorded on your pay slip and actually showing up in your fund.
If it looks like there’s a shortfall in the boss’s contributions, speak to the person who handles payroll at work. If you get no joy there, notify your fund – they can put you in touch with the Tax Office to lodge an unpaid super enquiry. If you are a union member, it’s worth talking to a union representative to see if the union can take action to recover unpaid entitlements.
The key message is to take an ongoing interest in your super. You certainly wouldn’t wear it if your employer short-changed your wages by $1,500 each year, and you shouldn’t have to put up with being ripped off on super contributions. You may not be able to access your super savings while you’re in the workforce, but it’s still your money.
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.
Ways to contribute to super
Contributions are an important way to achieve the lifestyle you want in retirement. Check out some of the ways you can get started.
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We look at the average super balances for different age groups in Australia so you can see how your super savings compare.