A Senate inquiry into unpaid superannuation entitlements has labelled practices denying 2.76 million workers an estimated at $5.6 billion in super payments  “wage theft”.

Those affected amount to 32 per cent of workers receiving superannuation guarantee payments and it all adds up to a big problem the inquiry wants legislative reforms to deal with.

Independent research originally calculated unpaid super at an average of $1489 per affected worker in 2013-14, before revising this figure up to a staggering $2025 per person, a total of $5.6 billion.

That had a cumulative effect on super balances at retirement of an average of $24,000.

The inquiry, which reported on Tuesday, also hit out at the Australian Taxation Office for its “inadequate” and “problematic” response to unpaid super.

So impotent was the ATO in the face of the issue, it was unable to provide details of super underpayment to the inquiry, conducted by the Senate Economics Committee.

As a result it had to rely on research from Industry Super Australia which analysed a sample of ATO data from 2014-15.

The ISA research used by the committee came up with the staggering figure of $2025 per person — a total of $5.6 billion.

Underpayment means super balances on average are almost $24,000 lower on retirement and costs the government $98 million a year in extra pension costs, ISA found.

“The committee believes that the ATO’s current reactive approach is problematic, and recommends that the ATO shift the balance to a more proactive stance,” it wrote.

The ATO had criticised ISA’s research, saying the estimates were too high. However, by reporting ISA’s figures, the committee appeared to dismiss the ATO objections.

“The committee is surprised at the ATO’s apparent reluctance to engage with the issue of producing an SG gap, particularly as the matter has been raised in numerous reviews dating back to 2010.”

The inquiry made 32 recommendations to address the unpaid super problem. Matt Linden, public affairs director with ISA, said the inquiry had placed “significant onus on the ATO to address the issue and not leave it up to employees to raise problems.”

“There are also legislative issues that need to be attended to. The law needs to be updated to ensure employers comply with super obligations and compliance needs to be brought into the digital age,” Mr Linden said.

Mr Linden said “the onus is now on the government to act on unpaid super. There are billions in unpaid worker entitlements and they are growing.”

A separate inquiry was held by the government and criticised by the super industry for not consulting widely, reported in March. “That’s given them time to include the issue in the budget process so they should be acting as soon as next week’s budget,” Mr Linden said.

Super underpayment and nonpayment has been particularly prevalent in the construction and hospitality sectors.

Channel 9’s A Current Affair has claimed the company owned by former MasterChef star and dessert specialist Adriano Zumbo failed to pay some employees’ super entitlements, paid money into non-existent accounts, fabricated policy numbers and failed to pay overtime to his workers.

MasterChef judge George Calombaris was forced to make good $2.6 million in underpayment of wages to 162 employees at his restaurants after first being alerted to problems by the Fair Work Ombudsman more than 18 months ago.