Next week’s Budget must include measures to address unpaid superannuation before an estimated additional $100 million in age pension costs spiral further out of control.
Industry Super Australia analysis of tax office data shows that, in 2013-14, almost one in three employees missed out on $5.6 billion in unpaid super entitlements, and, as a result, those nearing retirement had balances that were $23,857 lower on average.
Using conservative assumptions, Industry Super Australia estimates annual superannuation pension drawdowns are $300 million per annum less than they otherwise would be, costing the Government $98 million per annum in extra age pension payments.
The numbers come as a Senate committee inquiry into unpaid SG readies to report its findings later today –only one week out from the federal budget announcement.
Industry Super public affairs director, Matt Linden, said the costings demonstrate all Australians are impacted by rogue employers who avoid paying the super guarantee (SG).
“Employers who dodge compulsory super requirements are not only robbing workers of their retirement savings but also adding to the fiscal cost of the age pension.”
“These costs will grow over time unless urgent action is taken to address unpaid super.”
Linden said Australians expect the government to act on the inquiry’s recommendations.
“Unpaid super is an easy fix for government. They could align SG payments with wage cycles; extend single touch payroll coverage to all employees; or tighten enforcement and penalty regimes,” he said.
“Both the senate committee and an inter-agency group established by the Financial Services Minister have been working on this for five months. The ducks should be lined up and ready to go”.
“Australians, especially those who’ve been through the heartache of unsuccessfully chasing down what’s owed to them, expect our national leaders to act decisively,” he said.
Employers are required to pay 9.5 per cent in superannuation towards every employee over the age of 18 earning more than $450 (gross) a month. But an analysis of ATO data shows 2.76 million people were underpaid their super entitlements by an average of $2,025 per person in 2013-14.
Matt Linden is available for comment. Media contact: Phil Davey 0414 867 188