Australia’s unpaid super bill has risen by $500 million to $6.3 billion a year, with new analysis highlighting the scale of retirement savings lost as long-awaited payday super laws came into effect today.
Analysis by the Super Members Council (SMC) of newly-released Australian Taxation Office (ATO) data found around 3.4 million workers, or 28 per cent of employees, were underpaid super in 2023-24, missing out on an average of $1,850 each.
The findings come as employers are now required to pay superannuation at the same time as wages instead of quarterly, a reform the SMC said would help curb unpaid super and improve retirement outcomes.
“Unpaid super is on the rise, cutting billions of dollars each year from Australians’ retirement savings and highlighting why payday super laws are very much needed,” said chief executive Misha Schubert.
According to the analysis, workers who miss out on super contributions could be more than $30,000 worse off in retirement because of lost compounding investment returns.
New South Wales (NSW) recorded the largest total value of unpaid super at just over $2 billion, while NSW and Western Australia had the highest proportion of underpaid workers at 29 per cent.
The ACT recorded the highest average underpayment at $2,360, although it had the lowest share of underpaid workers at 20 per cent.
The council said unpaid super continues to disproportionately affect vulnerable workers, including women, who already retire with around a quarter less super than men. Younger workers and low-income earners were also among the hardest hit, with one in two workers earning less than $25,000 a year missing some or all of their super entitlements.
Recent survey results cited by the council found more than 70 per cent of Australians believed payday super would make it easier to track whether employers were paying the correct amount, while more than half expected to check their super more regularly.
The council said around 40 per cent of businesses were already paying super more frequently than quarterly, supported by digital payroll and Single Touch Payroll reporting systems.
ATO data also showed around 19,000 more employers had moved to more frequent super payments since payday super was announced, representing a 2.4 percentage point increase in the share of businesses doing so.
“Payday super will not only help to stamp out unpaid super – it could put more than $9,000 more in the average Australian worker’s pocket at retirement, thanks to more frequent payments and the power of compounding.”
“For employers making this transition, we appreciate the scale of the task and that’s why we support the ATO’s graduated approach on enforcement in the first 12 months.”
The ATO has said it will take a graduated approach to enforcing the new rules during the first year of implementation, focusing compliance efforts on areas of highest risk while businesses adjust to the new payment requirements.
