The current onerous penalty regime relating to superannuation guarantee (SG) non-payment has done little to address the problem and may have actually made it worse, according to the Institute of Public Accountants (IPA).
In a submission to the Senate Economics Committee inquiry into non-payment of the SG, the IPA has argued that the penalties might very often be “disproportionate to the mischief”.
“The harshness of the penalty regime can lead to further noncompliance delays, i.e. employers further delaying making superannuation contributions,” it said.
“The current onerous penalty regime has done little to address the problem of unpaid superannuation guarantee remittances which some experts are claiming is worsening. Moreover these punitive penalties have a significant impact on small businesses which are often late in meeting their SG obligations due to cashflow problems and not because of any more sinister intentions,” the IPA submission said.
It pointed out that small businesses did not have access to the same financial resources compared with larger businesses, stating: “Due to limited access to funds, one option they have is to delay payment of employee obligations”.
The IPA submission said that while its members strongly discouraged this practice, “for many small businesses it is a harsh reality”.
“Whilst a penalty regime is required as a deterrent to ensure employers meet their statutory employee obligations, the harshness of the current regime is considered excessive especially for the small business sector,” it said.
A member of the super fund has approached ASIC to investigate potentially misleading or deceptive representations by UniSuper regarding the holdings of its sustainable portfolios.
The median growth fund delivered 1.9 per cent in March, adding to the “stunning” rally that has seen super funds gain 11 per cent since November.
Vanguard has affirmed its support for the current super performance test, emphasising the importance of keeping the process straightforward.
While some superannuation funds have gone down the route of internalisation, others say they favour ‘smart partnering’ with external managers for diversification appeal.
Add new comment