The $5.1 billion problem costing one in four workers

One in four workers has been short-changed on their superannuation, advocacy group the Super Members Council estimates, costing them about $30,000 in savings by the time they retire.

About 2.8 million Australians were underpaid $5.1 billion in super entitlements in 2021-22, or an average of $1800 each, the council said. Blue-collar workers, young people and casual staff were most likely to be underpaid, with laws that allow businesses to pay super quarterly a key factor.

The council argues that by changing when businesses are required to pay super, nearly 13 million Australians – including these workers – could be better off.

Since three-quarters of super at retirement comes from compound returns, missing out on super early in life can be especially costly. Credit: Simon Letch

Assistant Treasurer Stephen Jones said last May that from July 1, 2026, employers would be required to pay their employees’ super at the same time as their salary and wages. But with less than six weeks of parliament left before the end of the year, the change is yet to be legislated.

Nearly two-thirds of businesses paid super quarterly in 2021-22. The council says the government’s promise to change laws to require businesses to pay super on payday rather than every three months will reduce underpayments and improve super balances.

“Some businesses use workers’ super entitlements to manage cash flow, leaving them with a big bill at the end of the quarter,” it said. “In many cases, the super ends up being paid late, underpaid, or not paid at all.”

Because returns would accrue and compound sooner, the average worker would be about $7700 better off in retirement if their super were paid alongside their wages instead of every three months, its analysis showed.

In dollar terms, the underpayment issue is only growing, with little change to the number of employees affected over the past decade.

Vulnerable groups, including the lowest-paid, were the most likely to be affected.

The council said half of employees earning up to $25,000 a year had been underpaid on their super, with the typical underpaid worker in the lowest 20 per cent of wage earners missing about a fifth of their balance by retirement.

Nearly one-third of workers in their 20s and three in 10 in their 30s were underpaid super in 2021. Since three-quarters of super at retirement comes from compound returns, missing out on super early in life can be especially costly.

The analysis also found people aged over 60 were more likely than average to have unpaid super, at 28 per cent.

“Many older Australians’ primary reason for working beyond 60 is because they cannot afford to retire,” the council said. “Unpaid super is arguably delaying their retirement.”

Workers in construction, trades and transport were more likely to miss out on super than in other sectors of the economy. Forty-one per cent of labourers had unpaid super in 2021-22, closely followed by machinery operators and drivers.

While the Tax Office can chase up businesses that fail to pay, the burden of identifying underpayments rests mostly with workers. Only 17 per cent of unpaid super was recovered in 2021-22.

What to do if you think you have unpaid super

• Check with your employer and nominated super fund.
• Estimate your super using the ATO’s super estimation tool and compare it to the super you have received.
• If your employer is unable/unwilling to sort things out, report your employer using the ATO’s online reporting tool.
• If the underpayment was more than five years ago, you’ll need documentation including payslips and super fund statements for the relevant years (plus a further six months). There’s no guarantee your inquiry can be progressed.
• Visit the ATO website for more information.

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