Superannuation Report: Cbus Super & Industry Super Australia

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Table of Contents

• The Findings of the Report
• Impact on Lacklustre Superannuation Payments on Female Workers
• Key Takeaways

In Australia, many people see superannuation as a crucial safety net for retirement. However, Cbus Super and Industry Super in a report released earlier this month, “Overdue: Time For Action On Unpaid Super” indicates that a significant portion of Australian employees and contractors are not receiving their earned superannuation guarantee. Clearly, this is very disturbing news for many Australian workers. We summarise the report’s findings and outline some of the impacts current lacklustre payments will have on women in particular.

The Findings of the Report

One of the report’s conclusions was that 30% of all workers owed superannuation did not receive some or all of their super in 2013-14. Some of the worst industries were construction, hospitality and cleaning industries. Lower-income workers were also more likely to miss out on the correct super payments.

Generally speaking, the report indicated that larger businesses were more likely to pay the correct super whereas small and medium-sized businesses were less likely to pay. Unfortunately, businesses that are not paying super correctly are likely to generate more profit as the salaries they are paying are lower.

One problem with superannuation is that many employers do not understand how super works. They also do not have proper accounting systems in place to calculate super correctly, or they simply ignore their requirements. Further, employees have a limited understanding of the process and their rights, which can impede workers from requesting their entitlements from an employer.

The report also addresses concerns surrounding enforcement – the current framework is not strong enough to ensure employers pay super. Importantly, the public must be aware as to what are an employees’ rights regarding superannuation.

The report recommended the following changes:

• Investigate the new estimates of underpayment;
• Look into the industries and employers that do not pay super;
• Fund the ATO to recover unpaid super;
• Close the loophole surrounding salary sacrifice;
• Look into real-time payment, reporting and compliance of super contributions;
• Improve systems for super funds to recover unpaid super from employers;
• Keep penalties in place for employers who fail to pay super including penalties for directors of companies; and
• Broaden the government safety net that protects super when a company becomes insolvent.

Impact on Lacklustre Superannuation Payments on Female Workers

A recent Senate enquiry into women’s financial security has also set out some major concerns regarding how superannuation is currently structured. For example, the superannuation savings gap between men and women upon retirement is currently 46.6%. There are several reasons for this, including:

• Less time spent working;
• Larger gaps in work history;
• Gender pay gap;
• Women undertaking more unpaid work; and
• Lower rates of pay for certain industries and occupations.

Therefore, the non-payment or underpayment of super will have an even larger impact on female workers, due to their often lower salaries and less overall savings from previous work. Where women are the primary caregiver, they are not receiving superannuation during that period. Women may also be working less or doing more casual roles where they do not meet the superannuation threshold.

Key Takeaways

If you have any concerns about your obligations as a company working with contractors or employees, you should speak with an employment lawyer. Non-compliance with your superannuation guarantee obligations can lead to you having to back pay entitlements and penalties, so it is important to meet your obligations.

If you are unsure whether you are paying the correct superannuation or entitlements, there are several helpful calculators online:

• Super Guarantee Eligibility Tool which helps you to confirm whether you are required to pay superannuation for your workers; and
• Super Guarantee Contribution Calculator which helps you work out the required contribution based on the salary.

If you have any further questions about superannuation, get in touch with our employment lawyers on 1300 544 755.