For too long, superannuation has remained ‘out of sight, out of mind’.
If you haven’t kept a close eye on it, oversights or dodgy employers could mean you could be short-changed tens of thousands of dollars by the time you reach retirement.
And according to new analysis from Industry Super Australia, it looks like the super gap has gotten worse – and it’s more serious than previously thought.
Analysis of ATO data from the 2016-17 year shows 2.85 million Australians are being short-changed on their super entitlements – an increase of 90,000 people from 2013-14.
It brings the total amount of underpayment to $5.94 billion, an increase of $340 million from 2013-14.
What does that mean for me?
To bring these figures down to earth, it means short-changed employees are being ripped off an average of $80 per fortnight, which is $2,070 every year you’ll never see again.
Those who have been paid their correct entitlements end up with 50 per cent more super than someone who has been underpaid – all in the space of a single year.
The effect of underpaid super is cumulative, too, and tends to affect the same workers year after year.
For young people, the damage is even worse: workers under the age of 25 earning less than $30,000 a year but being paid super entitlements in full see a stunning 81 per cent more super accumulated in a year than their underpaid counterparts.
Blue-collar workers, too, are more at risk, with 43 per cent of labourers, machinery operators and drivers collectively missing out on $800 million in super.
The gender super gap
It’s well-known that women accumulate less super than men, but new research from Rice Warner last month showed that the gender super gap varies according to which state you live in.
Western Australian women have it worst, seeing on average 39 per cent less super than their male counterparts, while the hole is – relatively speaking – narrowest in the Northern Territories, with a gap of 16 per cent.
Government must do more
ISA chief executive Bernie Dean called on major political parties to stem what he said was systemic exploitation.
“We are now seeing the cumulative damage the unpaid super epidemic is doing to workers’ super balances and it’s very clear,” he said.
“Allowing employers to continue robbing workers of their super entitlement means these workers are going to end up worse off at retirement.
“While most employers do the right thing, unless we see action from the major parties this election, those dodgy employers are going to continue taking advantage of lax laws, a weak regulator and insufficient penalties to rip off these hard-working Australians.”
According to Dean, solving the super gap blowout is straightforward: have employers pay employees’ super the same time as pay.
“The easiest way to end this exploitation and ensure workers are paid their super is to simply legislate that all employers must deposit money into a worker’s super account at the same time as they deposit their salary into their bank account,” he said.
“Anything else is nothing more than a band-aid solution that won’t fix the problem and will only see more hard-working Australians have their super entitlements stolen by rogue employers.”