Australian employers are dodging up to $4.6 billion in super guarantee payments and if you are one of those affected you could find yourself with no insurance coverage when you need it most.

Peter Koutsoukis, principal with lawyers Maurice Blackburn, says where employers are not making regular super payments, the life and total and permanent disability (TPD) insurance policies attached to super accounts might be invalid, meaning employees or their families may not be able to claim for injury or death.

“The situation varies policy to policy. For some, cover would cease immediately, for others it could be after there has been no contribution payment for three or six months,” Mr Koutsoukis said.

Maurice Blackburn’s comments followed the release of a new report by Industry Super Australia and Tria Investment Partners showing that under- or non-payment of the 9.5 per cent super guarantee (SG) payments that all workers earning more than $450 a month are entitled to is surprisingly widespread, rising dramatically and cost Australian workers $3.6 billion in 2013-14.

As many as 2.4 million Australians, or 30 per cent of the workforce, have suffered from the super rip-offs. The average affected worker is dipping out on four months of super contributions.

A further $1 billion is going missing from workers’ super as employers legally substitute employees’ salary sacrifice contributions for their own SG obligations.

Loss of coverage because of unmade super guarantee contributions is not uncommon.

“Sadly this is a scenario we see too often, where someone believes they have TPD insurance through their super, only to find out when it’s too late that their employer has not been paying the proper contributions, sometimes for a number of years,” Mr Koutsoukis said. 

Peter Koutsoukis said claims may not be paid.

“This leaves people at a major disadvantage in seeking to access insurance they are entitled to, when they are already in a stressful situation dealing with a significant injury or illness. 

“The findings of (ISA’s) report should serve as a wake-up call to all employers and government that not meeting your obligations when it comes to paying employees’ super contributions is unacceptable and cannot be allowed to continue.

On recent example Maurice Blackburn saw was a 19 year old bar attendant who developed a very rare form of bone cancer. His parents went to claim on cover that should have yielded a payout of $300,000 but were told that as super contributions had not been paid the policy was void, Mr Koutsoukis said.

Bar staff often find employers have no assets. Photo: Getty

“We looked at suing the employer but as is common in these cases, especially in the bar industry, the employer had no assets,” Mr Koutsoukis said.

The ISA research identified that much of the unpaid super was a result of employers paying contribution levels lower than their obligations under the SG which now stands at 9.5 per cent of salary.

In the case of part payment of super entitlements insurance policies usually remain in place and claims are paid out, Mr Koutsoukis said.