New research shows about one third of Australian workers missed out on superannuation entitlements totalling $4.6 billion in 2013-14.
Under the mandatory Superannuation Guarantee (SG), employers are required to contribute 9.5 per cent into the super fund of any worker aged 18 and over earning $450 a month.
But two recent reports, by Industry Super Australia and Tria Investment Partners, suggest some employers are drastically underpaying – or failing to pay – SG contributions.
Based on Australian Tax Office (ATO) data, the reports estimate that employers failed to pay at least $3.6 billion in SG contributions to 2.4 million workers in 2013-14, with the average worker missing out on more than $1,400.
Younger workers, low income earners and workers in the construction, hospitality and cleaning industries were most likely to have missed out, according to the research.
Salary sacrifice: get it in writing
Another 3% of workers – more than 300,000 people – were short-changed a further $1 billion by bosses who used a “loophole” in salary sacrifice rules. Current laws allow employers to count an employee’s salary sacrifice contributions toward their minimum SG obligations.
“[Most] employers understand and support the efforts of their employees to build their retirement nest eggs by providing genuine salary sacrifice arrangements,” the report says. “However, some do not.”
Employees can protect themselves by using a written salary sacrifice agreement which specifies the reduced level of salary paid as well as the total superannuation contribution. The total contribution should include both the mandatory employer SG contributions plus the amount salary sacrificed.
The Association of Superannuation Funds of Australia advises workers to check their SG payments are accurate and up to date.
Association chief Dr Martin Fahy says the loss of super entitlements impacts younger workers in particular because they miss out on the potential growth of today’s contributions over the years until retirement.
“It is important to know what you are entitled to when it comes to SG so you are not missing out on a large sum in retirement," Dr Fahy says. “By law, your employer must include on your payslip any superannuation contribution made and the name of the fund to which the contribution was made.
“You should check the amount you have been paid is 9.5 per cent of your gross (pre-tax) ordinary time earnings for the period.”
If your employer contributions have been going into a fund you no longer use or check, you should consider consolidating your super, Dr Fahy says.
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Ask the ATO
If you have checked with your employer and super fund and are still not sure your employer is paying you the correct superannuation contribution, you can lodge an unpaid super enquiry with the ATO.
You will need to provide your employer's ABN and contact details, along with information on your current employment arrangement and details of the period of lost super. Once received, the ATO will investigate your case and keep you updated.
If you have any questions or concerns about your super, please feel free to call us on 1800 682 525.