Finance Your Super Unpaid super grows and yet neither party has a policy to fix it

Unpaid super grows and yet neither party has a policy to fix it

Super underpayments.
Young blue-collar workers are vulnerable to super underpayment. Photo: Getty
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Superannuation underpayment levels have jumped over the three years to 2016-17, leaving those who have been underpaid with an average of 50 per cent less in their super balances than those being paid correctly.

As workers age, the effects of the underpayments snowball, with the average balance for those between 60 and 64 being underpaid sitting at  $41,184 below where it should have been in 2016-17, according to research from Industry Super Australia (ISA).

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And the situation is unlikely to be greatly improved regardless of who wins the election this Saturday, as neither party has fully addressed the issue in its policies.

Labor has gone some way towards a solution, while the Coalition has not changed its policy offer at all.

The research showed that the average balance gap between those receiving their full super entitlement and those being underpaid had risen to $24,506 in 2016-17 – 25 per cent above the $19,709 recorded in 2013-14.

The gender gap in superannuation was also found to be more pronounced in WA and Queensland than for the average across the country, according to research from Women in Super and the Australian Institute of Superannuation Trustees.

In WA, female super balances were 39 per cent below the men’s average, while in Queensland the figure was 34 per cent compared with the national figure of 30 per cent.

The research – based on an analysis of the account balances of four million members of five large industry superannuation funds by Rice Warner – found in WA, the average super balance for a female aged between 30 and 59 was $51,000, compared with $83,000 for a male.

Sandra Buckley, CEO of Women In Super, told The New Daily that the difference in WA and Queensland was “probably due to the higher percentage of jobs in the high-income but male-dominated mining sector”.

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The underpayment of superannuation is most pronounced for blue-collar workers, with 41 per cent or more of labourers, machinery operators and apprentices falling victim to the practice in 2016-17.

Their total losses for that year amounted to $1.271 billion, ISA found.

Those earning up to $30,000 were also more likely to be underpaid than those earning more, with an average of 42.2 per cent of workers in that category affected by total underpayments of $588.9 million.

Younger people were also more likely to be affected, with 37 per cent of those aged 20 to 29, and 32 per cent aged 30 to 39 suffering super underpayments.

Overall ISA found the likelihood of underpayment for those three main risk factors was an alarmingly high 51.5 per cent.

“We are now seeing the cumulative damage the unpaid super epidemic is doing to workers’ super balances and it’s very clear,” ISA CEO Bernie Dean said.

“Unless we see action from the major parties … those dodgy employers are going to continue taking advantage of lax laws, a weak regulator and insufficient penalties to rip off these hard-working Australians.”

Policy response lacking

The Coalition has not announced action on unpaid super. Labor has said it will ensure super is included in the National Employment Standards to highlight the need for employers to pay full entitlements.

However Mr Dean said: “The law needs to change to require super contributions to be paid at the same time their salary is paid.”

Labor has also committed to phase out the $450 monthly income cap below which super does not need to be paid.

That move would help reduce the super gender gap because under the current system many women working part-time are not paid super.

The Coalition has made no pledge to change the $450 monthly limit.

The New Daily is owned by Industry Super Holdings

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