Aussies losing almost $5b in unpaid super every year
Australians miss out on almost $5 billion in superannuation benefits every year, affecting one in four workers across the country.
Workers were underpaid by $24.4 billion in the five years between 2018 and 2023, according to the latest Australian Taxation Office data analyzed by industry group Super Members Council.
NSW had the highest underpayment value at an eye-popping $8.1 billion over five years, followed by Victoria ($6.1 billion) and Queensland ($4.7 billion).
The impact of underpayment is concentrated on a person’s working life.
About $1,730 in missed retirement benefits in a year could potentially leave a person $30,000 poorer in retirement due to the loss in the composition of investment returns.
Council president Misha Schubert said: “Free pensions hit where it hurts the most – for women, young workers and people on low incomes.” he said.
According to the Association of Australian Superannuation Funds, women currently retire with 25 per cent less retirement savings than men.
Young workers and low-income people were also at risk of underpayment; One in two people with incomes under $25,000 were missing out on unfunded retirement benefits.
“This is money Australians have earned but never been paid out, leaving millions of people significantly poorer in retirement,” Ms Schubert said.
Workers in the Northern Territory are the worst hit, with pensions underpaid by an average of $2,140 each year, followed by the ACT ($2,120) and Western Australia ($1,800).
From July 1, payday super laws will come into force, requiring employers to pay pension contributions within seven days of wages being paid.
Super funds will have three working days to allocate or refund contributions, increasing transparency for workers.
Ms Schubert said the reform would be a game changer for outstanding benefits.
“This long-overdue change will make pension payments visible alongside salaries, making them easier to fix and much harder to hide,” he said.
The tax office, on the other hand, plans to take a pragmatic approach to compliance during the first 12 months of the reforms.
“Employers who make an honest mistake and take steps to rectify it quickly will not be the focus of ATO compliance action in the first year,” said tax office deputy commissioner Emma Rosenzweig.
Almost half of businesses are already making quarterly pension payments more frequently as required.
“It’s important to plan ahead; review and check with your payroll provider whether you’re prepared to pay retirement guarantees more frequently and start transition planning early,” Ms. Rosenzweig said.
But real-time super payments could put pressure on businesses already in financial distress, according to insolvency and business rescue expert Jirsch Sutherland.
“Essentially, super is operating as a ‘buy now, pay later’ mechanism for some businesses, and that flexibility is about to disappear,” said partner Chris Baskerville.
Industries with high payroll costs and tight margins will likely face greater pressure.
“These are industries with very little margin for error,” Mr. Baskerville said.
“When pensions have to be paid each cycle, there is much less capacity to absorb irregular or seasonal cash flow.”
By the end of 2025, Australians’ total superannuation fund was $4.5 trillion.
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