The value of unpaid super contributions now exceeds $1 billion, according to a special audit of the superannuation guarantee system by the Commonwealth Auditor General.

Figures published in a report on the system show that the number of employers dodging super payments is increasing, especially in industries with casual workforces such as industrial cleaning, bars, restaurants and retailers.

However, the problem is also prevalent in other sectors, including the childcare industry, building and construction, and information technology.

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In the past 12 months, the Australian Taxation Office has targeted its proactive investigations on childcare centres and hotels in an effort to improve compliance among employers.

The ATO is now using data matching techniques to unearth employers likely to be underpaying staff on their super entitlements.

While these proactive investigations are highly effective, the ATO was only able to initiate 5600 such audits last year.

According to the auditor general, the ATO’s proactive investigations have had a 70 per cent strike rate in the past five years and led to the raising of more than $200 million on behalf of employees who were unaware of being underpaid.

Under Australian law, employers are required to make super contributions equivalent to 9.5 per cent of the gross pay of permanent staff.

Following recent reforms, most casual workers are also in line to receive super contributions.

ATO recovering cash in response to complaints

Although data matching has contributed to the success of proactive audits, most of the ATO’s recovery work is taken up by responding to employees’ complaints.

The ATO investigated some 17,000 complaints in 2014.

According to the auditor general, around 17,000 complaints were investigated by the ATO in 2014, with more than 60 per cent leading to findings of unpaid superannuation.

These were valued at $331 million.

The auditor general found that the ATO has been quite efficient at responding to complaints from employees.

Investigations into 99 per cent of complaints are begun with 28 days of the ATO being notified.

And more than half of all cases are resolved within four months.

While the ATO has measured the total level of unpaid super at $1.02 billion, about $200 million had to be written off as “unrecoverable” either because the employer became insolvent or it was deemed “uneconomic” to pursue payment.

Employees fear losing their jobs if they complain

The auditor general’s report also revealed details about market research undertaken by the ATO about Australians’ perceptions of the superannuation guarantee system.

The tax office has undertaken extensive study since 2012 to gauge the public’s attitudes and understanding of superannuation.

Although 90 per cent of Australians believe superannuation is important to them, only 42 per cent know that compulsory contributions of employers was set at 9.5 per cent of employees’ pre-tax earnings.

According to the ATO surveys, only 49 per cent of respondents believed they were knowledgeable about superannuation matters.

Perhaps the most disturbing findings were those relating to willingness of employees to lodge complaints.

The ATO found that around 13 per cent of survey respondents had wanted to raise complaints but only half followed through because they feared repercussions.

“…half of these employees did not actually complain, mostly because they feared losing their job or angering their employer,” the auditor general stated.

“Lack of knowledge about what to do was also a factor.”

Some super funds are taking action

The auditor general found that most industry super funds had introduced systems to pursue unpaid super contributions on behalf of members.

Less than half of those surveyed by the ATO said they were knowledgeable about superannuation matters. Photo: Shutterstock

“Most industry superannuation funds have well-established early intervention strategies to pursue and collect arrears and employ debt collection services,” the auditor general stated.

“Other funds, such as retail funds, typically leave the monitoring of employer compliance to members.”

The report highlighted the superannuation recovery service offered by the construction industry super fund, Cbus.

Employers joining Cbus enter into a contract to pay superannuation contributions by the first day of the following month.

Where employers fail to make the necessary payments, Cbus has an arrears collection process rolled out over 48 days.

Cbus and its credit control provider recovered $109 million of superannuation guarantee payments on behalf of 96,000 members in 2014.