Moving super payments to align with wages could give millions of Australians $50,000 more at retirement and drastically curb Australia’s unpaid super scourge which cost workers $33 billion over seven years.
The federal government should be commended for helping Australian workers get the super they are owed by mandating that super is paid on payday and not once a quarter.
The government has listened to a broad coalition of stakeholders – including unions, employer groups and consumer bodies to mandate that employers’ super payments to employees are made on payday.
Two senate inquiries, Treasury and the Australian Taxation Office have all said moving to more frequent super payments could effectively combat the on average $4.7 billion a year unpaid super scourge.
The one in four workers currently underpaid every year will get a huge boost to their super savings. Not being underpaid super could mean an up to extra $50,000 at retirement when combined with higher compound interest from more frequent payments. This measure is a big win for younger workers, those in blue collar jobs, hospitality and retail workers who bear the brunt of unpaid super.
It will also benefit more than 1 million mostly lower paid and younger women who are short-changed. Unpaid super can cost some women as much as 10% from their final nest egg – a crushing financial blow when women already retire with about a quarter less super than men.
And all the 4.2 million Australians who are paid super quarterly will get thousands more at retirement due to more frequent payments earning compound interest for longer.
Businesses will now be on a level playing field and have a smoother payroll management system that will no longer lead to the building up of large super contribution liabilities at the end of each quarter.
Quarterly super payments made it difficult for workers to keep track of payments and for the ATO to monitor compliance in real time. This move means the ATO can use real time monitoring and act quickly when a complaint is lodged – no longer having to wait until the end of the quarter to launch an investigation.
The government setting the ATO targets for recovery and indicating it would treat the deliberate and systemic underpayment of super as wage theft is the stick needed to stop the small number of employers who intentionally rip their workers off.
Comments attributable to Industry Super Australia Chief Executive Bernie Dean:
“This is a big win for the three million mostly young and lower paid Australians unfairly deprived the super they’ve earned and will give them a better shot at building a good nest egg for retirement.”
“The government should be commended for listening and then taking the necessary steps to end the huge super rip off which was undermining the future economic security of too many young women and others on lower incomes.”
“Aligning payment of super and wages is the right thing to do by workers, boosts government revenue, lifts investment returns and puts all employers on a level playing field.”
