A recent report * revealed that around 690,000 working Australians aren’t getting the super they’re entitled to.
That’s 7% of the workforce. And this number is expected to rise – between 2013 and 2023, around 4.4 billion dollars of super entitlement won’t be paid.
It’s called the ‘Super Guarantee’ (SG) for a reason. Most Australian employees are entitled to some form of super, and employers are required to contribute 9.5% of their employee’s basic wage into their chosen super fund. But not every employer is paying enough. Some aren’t paying at all. And most of the time they get away with it, because not enough of us are paying attention to our super. Why should we? We can’t access it until retirement. We’ll worry about it when we have to.
But take a moment to think about this: Australians affected by Super Guarantee non-compliance are losing an average of $3,800 per year from their super balance. Doesn’t sound like much, does it?
If you were a 20-year-old today, by the time you reached retirement age, that $3,800 your employer isn’t paying you each year would add up to $171,000. And this calculation doesn’t even include the investment returns that would have been paid on top of this figure. That’s over $171,000 lost from your retirement money.
Sound like a lot now?
There are many reasons why employers aren’t paying compulsory super contributions, and not all of them are intentional. These can include employer insolvency, administration errors, or simply being unaware that an employee qualifies for super. The current penalties mean employers who are caught out by the ATO must pay the amount owed to the employee’s super account, plus interest and fees. But this is no guarantee either. The process to retrieve unpaid super can be lengthy and other factors – such as employer bankruptcy, administration or liquidation; the company is deregistered; or the cost to the ATO of pursuing unpaid super is greater than the amount owed – could prevent the employee from ever getting their full super entitlements. Not to mention the government is looking to lower these penalties … which are already not substantial enough to be a deterrent.
Not everyone knows the ins and outs of super, or whether they’re entitled to more than they’re getting. Maybe we don’t care about it as much as we should because it’s not paid into our bank accounts for immediate use like the rest of our wages? And since super payments can be made anywhere from a weekly to a quarterly basis, how can we even keep track?
Super is an investment, just like any other, so we need to understand how it works. It might not be the most interesting topic around, but it’s your money, so it pays to be in the know. Understanding super now means having the best outcome for your retirement.
If you’re not getting super contributions from your employer, the contributions on your payslip and super statement don’t add up, or if you don’t think you’re getting the 9.5% you’re entitled to, speak up. If your employer won’t comply, then contact your super fund or lodge an enquiry with the ATO.
You have nothing to lose, and everything to gain.
Super is just one area of finance we could all be better informed about. With longer life expectancies and a growing strain on the Age Pension, having greater knowledge about our finances now can lead to a more independent retirement later.
Do you think you’re being short-changed when it comes to your super? Visit the ATO website here.