A new study has found that many employers are effectively pocketing some or all of the benefits of employees who salary sacrifice super contributions from lower incomes.
The analysis, undertaken by Industry Super Australia and Construction and Building Unions Superannuation (Cbus), showed an estimated 2.4 million Australians are not being paid their legal super entitlements.
David Whiteley, chief executive of Industry Super Australia, said the legal loophole meant that workers were short-changed an average of $1489 or almost four months of superannuation contributions in 2013-14.
"Sixty-one per cent of those affected have incomes under $80,000 and only six per cent affected have incomes that place them in the top tax bracket over $180,000,” Mr Whiteley said.
“Until the loophole is closed, employees should check the arrangements applying to them and seek agreement with employers to maintain their 9.5 per cent minimum employer contributions on their full pay, on top of any salary sacrificed amount.”
The analysis of official Australian Tax Office (ATO) and Australian Bureau of Statistics (ABS) data showed that employers currently have up to four months to pay SG (supernnuation guarantee) while wages are typically paid fortnightly or monthly.
Workers in the construction, hospitality and cleaning industries, and low-income workers were more likely to miss out; small and medium-sized businesses were least likely to pay super guarantee (SG) and businesses who don’t pay SG have an unfair advantage over those employers who do.
“We have stories of workers who’ve put faith in the system only to discover months later that their super, including extra voluntary contributions, has not been paid into their accounts and is lost completely when companies move into liquidation,” said Cbus chairman Steve Bracks.
“It is not unusual to hear from members who have lodged a complaint with the ATO still waiting for answers, let alone their money, years afterwards. One has told us he was advised recovery of unpaid super may take up to 10 to 20 years.”