Is the boss really paying your super?

A new report by Industry Super Australia (ISA) estimates $5 billion worth of employer super contributions go unpaid each year. 

Employer non-compliance with Super Guarantee obligations has a significant impact on the retirement incomes of Australians. The younger the employee, the greater the impact as they miss out on compounding returns for a longer period of time.

To be far, the vast majority – about 95% of employers, do the right thing. In 2020/21 for instance, employers contributed a total of $74 billion to their workers’ super.

Nonetheless, the issue of non-payment of employee super has been the subject of two major reviews in recent years, and was identified as a parliamentary priority in 2019-20.  When the boss doesn’t keep up with compulsory super payments, recovering the money can be difficult.

According to the Australian National Audit Office (ANAO), the Tax Office, which is responsible for chasing up unpaid super, doesn’t have a great success rate. Only around 15% of outstanding super is collected each year.

Part of the problem for workers, is that super contributions do not need to be paid at the same time as wages. Employers can pay super contributions quarterly. This makes it harder to keep track of the boss’s super payments. But until the system changes, the onus is on employees to check how much their employer is tucking into super each year.

Keeping tabs is all the more critical because business failures account for a decent chunk of unpaid contributions. It may only be after a business has gone belly up that people realise their super hasn’t been paid. At that point it can be considerably more difficult to recover unpaid super.

If it looks like you’re being short-changed on compulsory super, the first step is to speak with your employer. Ask how often they're making contributions – and which fund the money is being paid into. Then check your super fund member statements to see if the money has actually gone into your fund.

If you still think the boss is ducking out of their super obligations, head to the Tax Office website to report your employer online. It can still be worth taking action even if the business you worked for has wound up.

The main point is that the earlier you take action, the better. It’s a lot harder for a business to pay a significant sum of outstanding super rather than catching up on a smaller amount.  It also means you’re less likely to miss out on those sweet compounding return.

Paul Clitheroe is Chairman of InvestSMART, Chair of the Ecstra Foundation and chief commentator for Money Magazine.