Is your boss paying you the super you’re entitled to? Many don’t

Unpaid superannuation has hit $4.8bn as almost three million workers miss out, but a new ‘game-changer’ rule meant to fix the problem is on the way.

Almost three million workers are missing out on billions of dollars of superannuation entitlements each year from bosses who fail to pay, but change is coming.

Despite employers being required to include super on workers’ payslips, they only have to pay it to superannuation funds quarterly, and a new analysis by the Super Members Council of Australia says $4.8bn was underpaid to 2.9 million people in 2020-21, a 14 per cent jump on 2019-20.

Modelling from SMC – recently formed from the merger of Industry Super Australia and the Australian Institute of Superannuation Trustees – has found that lower income workers and younger women are disproportionately impacted.

It says new payday super rules – announced in May’s federal budget but not due to start until mid-2026 – will mean employers must make their compulsory payments in line with wages, and will “dramatically reduce unpaid super”.

Matt Linden from the Super Members Council of Australia. Picture: Supplied

SMC general manager strategy Matt Linden said payday super would be “a game changer”.

“Industrial relations regulations required employers to put amounts on payslips, but it never changed the obligation in respect to when they had to pay,” he said.

“A lot of people think they are getting paid because they see it on their payslip, but they’re actually not because the law hasn’t kept pace.”

Mr Linden said some employers who did not pay super more frequently than their minimum quarterly obligations found themselves “getting into strife because of these large super liabilities accruing”.

“Then it comes time to pay, and maybe they haven’t set enough aside, and their employees end up being underpaid,” he said.

“It looks as though the government has made this a much higher priority, and we are starting to see now a number of things coming through with the changes which are needed to actually get on top of this problem.”

SMC modelling found that the lowest-paid workers could receive a 25 per cent retirement balance boost – up to $36,000 – from eliminating unpaid super.

ATO deputy commissioner superannuation and employer obligations Emma Rosenzweig said she was “excited and passionate” about payday super.

“It’s a simple idea that can make a really big difference,” she said.

There already had been high-level industry discussions and workshops about the change, Ms Rosenzweig said.

The ATO will soon get tougher on employers who do not pay on time.

Ms Rosenzweig said new advanced data collection from super funds and payroll systems would allow it to “follow-up employer noncompliance much more proactively” from 2024.

“We will be taking further and stronger action in relation to unpaid super guarantee debt,” she said.

“We are trying to implement and change the behaviour of employers.”

In 2022-23, the ATO issued more than 134,000 “nudges and reminders” to employers who had previously had issues with compliance.

This raised more than $80m in super taxes, and the ATO collected and paid almost $700m of super entitlements into members’ accounts from unpaid super.

Bosses who don’t pay super on time can stunt the growth of your life savings. Picture: iStock

Mr Linden said people could check they were getting paid correctly through super funds’ online accounts or apps showing if the contributions to their payslips were making it through to their funds.

Checking could be difficult because people might need three months of payslips to line up with an employer’s quarterly payments, he said. “That makes it much more confusing than it should be for people.”

Mr Linden said many employers already paid more frequently than quarterly because they had better business practices and cashflow management.

“Anyone knows that instead of paying something regularly, if you leave it to build up it causes a big cash flow headache when it comes time to pay,” he said.