In a startling revelation, the Australian Taxation Office (ATO) has reported that employers failed to pay a staggering $5.2 billion in superannuation to workers in the 2023-24 financial year – the highest amount ever recorded. The troubling figures, released in the ATO’s annual report, have sparked outrage among unions, politicians, and superannuation advocates, who are demanding urgent action to protect workers’ retirement savings.
The Superannuation Gap Widens
Despite a slight decrease in the percentage of unpaid super from 6.7% to 6.3%, the net amount of superannuation that went unpaid rose from $4.8 billion in 2022-23 to an alarming $5.2 billion in 2023-24. This upward trend has been consistent since 2016-17 when the gap stood at $3.5 billion, highlighting a growing problem that threatens the financial security of Australian workers in their retirement years.
The ATO attributes the increase in part to its enhanced compliance efforts, which have resulted in a rise in superannuation guarantee charges from $1.2 billion to $1.9 billion over the past year. However, the Super Members Council (SMC) estimates that the ATO is only detecting about 22.5% of the total underpayments, suggesting that the true extent of the problem may be even more severe.
Insolvent Employers Leave Workers High and Dry
Perhaps most concerning is the revelation that $1.4 billion of the unpaid superannuation is likely to go unrecovered due to employer insolvency. This has led to renewed calls for superannuation to be included in the fair entitlements guarantee, a taxpayer-funded safety net that currently covers unpaid wages and other entitlements when businesses go under.
When businesses go under, workers shouldn’t lose their retirement savings. The current system essentially rewards employers who do the wrong thing by letting them off the hook.
– Mark Morey, Unions NSW Secretary
Unions argue that excluding superannuation from this safety net is unfair and leaves workers vulnerable to losing their hard-earned retirement savings through no fault of their own. The Australian Council of Trade Unions (ACTU) has called the situation a “shameful legacy” of previous government inaction on the issue.
Reforms on the Horizon?
The Labor government has committed to including superannuation in the fair entitlements guarantee as part of its 2023 national platform but has yet to provide details on when and how this will be legislated. A government spokesperson stated that any reforms would need to balance the protection of employee entitlements with broader corporate policy considerations.
Other measures aimed at tackling the problem include the introduction of payday superannuation from July 1, 2026, which will require employers to pay super at the same time as employees’ wages. The government also expects to recover an additional $56.6 million in superannuation guarantee charge debt over the next four years through strengthened compliance measures.
A Wake-Up Call for Action
The shocking figures revealed in the ATO’s report serve as a wake-up call for urgent action to address the growing problem of unpaid superannuation in Australia. With billions of dollars in workers’ retirement savings at stake, pressure is mounting on the government to implement meaningful reforms that will hold employers accountable and protect the financial future of Australian workers.
As the debate over solutions continues, one thing remains clear: the status quo is no longer acceptable. It is time for policymakers, unions, and superannuation funds to work together to close the superannuation gap and ensure that every Australian worker receives the retirement benefits they have earned and deserve.
Despite a slight decrease in the percentage of unpaid super from 6.7% to 6.3%, the net amount of superannuation that went unpaid rose from $4.8 billion in 2022-23 to an alarming $5.2 billion in 2023-24. This upward trend has been consistent since 2016-17 when the gap stood at $3.5 billion, highlighting a growing problem that threatens the financial security of Australian workers in their retirement years.
The ATO attributes the increase in part to its enhanced compliance efforts, which have resulted in a rise in superannuation guarantee charges from $1.2 billion to $1.9 billion over the past year. However, the Super Members Council (SMC) estimates that the ATO is only detecting about 22.5% of the total underpayments, suggesting that the true extent of the problem may be even more severe.
Insolvent Employers Leave Workers High and Dry
Perhaps most concerning is the revelation that $1.4 billion of the unpaid superannuation is likely to go unrecovered due to employer insolvency. This has led to renewed calls for superannuation to be included in the fair entitlements guarantee, a taxpayer-funded safety net that currently covers unpaid wages and other entitlements when businesses go under.
When businesses go under, workers shouldn’t lose their retirement savings. The current system essentially rewards employers who do the wrong thing by letting them off the hook.
– Mark Morey, Unions NSW Secretary
Unions argue that excluding superannuation from this safety net is unfair and leaves workers vulnerable to losing their hard-earned retirement savings through no fault of their own. The Australian Council of Trade Unions (ACTU) has called the situation a “shameful legacy” of previous government inaction on the issue.
Reforms on the Horizon?
The Labor government has committed to including superannuation in the fair entitlements guarantee as part of its 2023 national platform but has yet to provide details on when and how this will be legislated. A government spokesperson stated that any reforms would need to balance the protection of employee entitlements with broader corporate policy considerations.
Other measures aimed at tackling the problem include the introduction of payday superannuation from July 1, 2026, which will require employers to pay super at the same time as employees’ wages. The government also expects to recover an additional $56.6 million in superannuation guarantee charge debt over the next four years through strengthened compliance measures.
A Wake-Up Call for Action
The shocking figures revealed in the ATO’s report serve as a wake-up call for urgent action to address the growing problem of unpaid superannuation in Australia. With billions of dollars in workers’ retirement savings at stake, pressure is mounting on the government to implement meaningful reforms that will hold employers accountable and protect the financial future of Australian workers.
As the debate over solutions continues, one thing remains clear: the status quo is no longer acceptable. It is time for policymakers, unions, and superannuation funds to work together to close the superannuation gap and ensure that every Australian worker receives the retirement benefits they have earned and deserve.
