Industry Super Australia report finds workers cheated out of $5bn in super each year

Dodgy employers pocket $5bn of workers’ super every year, with more than a quarter of employees taking a hit on their retirement savings, a new report reveals.

Dodgy employers are pocketing $5bn of Australian workers’ hard-earned savings each year.

Dodgy employers are pocketing $5bn of Australians’ hard-earned super each year, with more than a quarter of the nation’s workers cheated out of a portion of their retirement savings, according to a new report from Industry Super Australia.

Close to three million workers are missing out on an average $1,700 each year that should be going into their retirement savings but is instead being kept by unscrupulous employers taking advantage of lax enforcement and loose laws. Over time the losses mean some are retiring with tens of thousands of dollars less than they are owed.

ISA’s analysis shows the young and those on lower incomes are most likely to miss out on their hard-earned savings, with the underpayments hitting tradies and hospitality workers hardest.

The superannuation lobby group’s deep dive into 2018-19 ATO tax file data found that close to 1.7 million men and 1.3 million women were underpaid super that year. Men were cheated out of $3.4bn in savings, while women lost out on $1.6bn of the money owed to them.

Younger workers bore the brunt of the rip-off, with a third of workers under 30 – or about 890,000 people – underpaid over the 12-month period.

Half of those earning less than $25,000 were missing super payments, while a third of those earning between $25,000 and $50,000 were underpaid super.

Blue-collar workers including machinery operators and drivers, labourers, technicians and trade workers suffered more than most, with 40 per cent underpaid super.

ISA is calling on the government to mandate super be paid monthly, alongside wages, so workers can more easily tell if they are being ripped off or not.

“This is a $5 billion a year rip off on a quarter of Australia‘s workers that politicians are refusing to fix,” Industry Super Australia chief executive Bernie Dean said.

“Super is your money, you should get it paid at the same time you get your wages. By not mandating the payment of super as wages politicians are stopping millions getting what they are owed.”

Mr Dean said he was only calling for everyday workers to get the same treatment as politicians.

“Our federal politicians get their super paid on payday, so should all Australian workers.”

According to ISA’s analysts, the cumulative unpaid super debt has climbed to an eye-watering $28.8bn over the past six years. More will be lost unless politicians act, Mr Dean warned.

“Most employers are doing the right thing, but they are being undercut by competitors who are getting away with daylight robbery. Paying super with wages is the only way to get workers their money and level the playing field for business.”

Workers largely rely on the Australian Taxation Office to recover their money as it is difficult to sue for super. But the report found that unscrupulous employers do not fear the regulator, with the ATO recovering just 12 per cent of unpaid super annually.

The tax office rarely issues maximum penalties or publicises the little enforcement activity it does carry out, ISA said as it called for the Fair Work Ombudsman to step in.

“If the ATO is unwilling or unable to recover workers’ savings the law should be changed so that employees, the Fair Work Ombudsman, and others acting on behalf of workers can,” it said.