Australian workers lose more than $4.7 billion a year in unpaid super — and the ATO rarely penalises employers

Australia Broadcast Center

20 hours ago

More than 80 per cent — several billion dollars annually — of unpaid superannuation goes unrecovered, and the authority in charge rarely penalises employers who do not pay it.
Richard Aichinger says his son hasn't been paid superannuation for more than 12 months — and, despite reporting it to the Australian Taxation Office (ATO) at the start of the year, it is still continuing.
The 19-year-old, who is a second-year electrical apprentice, has approached his boss on numerous occasions, but hasn't received any clarity.
"They just keep getting the answer that, 'Yeah, they'll be paying it soon'," his father says.
Mr Aichinger, from New South Wales, says his son hasn't heard anything since he reported the issue to the ATO back in February.
"He's very annoyed about it," he says.
From July 1, the "superannuation guarantee" rate will increase from 11.5 per cent to 12 per cent.
That means an amount equivalent to 12 per cent of your ordinary earnings should be paid into your super fund by your employer.
You can check if that's happening through the government's myGov service or directly through your super fund.
Australia's retirement saving system is mandatory, and the funds controlled by the sector are set to surpass the UK and Canada within the next five to seven years to become the second-largest pool of retirement savings in the world, despite our small population.
But that's only if the money gets there.
Misha Schubert, from the super funds' peak body the Super Members Council, says the ATO hasn't been tough enough on dodgy employers.
"The ATO needs to be a strong cop on the beat and really lift the bar on its compliance and recovery efforts, to ensure that Australian workers are getting paid the super they are legally owed," she says.
The ATO recovered just 17 per cent of the $4.7 billion in unpaid super for 2020-21, the most recent available figures.
"Every week in Australia, $100 million that is owed to workers in super does not make it into their super accounts," Ms Schubert adds.
A 2024 report by the council calculates that 2.8 million people are failing to receive their full super entitlements each financial year, with the average underpayment per affected worker being $1,810.
"The size and scale of that challenge is shocking, and there needs to be further uplift in the proactive efforts to recover that money for workers," Ms Schubert says.
In 2020-21, the ATO issued 9,594 penalties for unpaid super. But only 4,124 (43 per cent) of them required the business to pay a penalty above remediation of the unpaid amount.
That means for most businesses caught doing the wrong thing, the amount they paid was simply the money they should have paid workers before they got caught.
A question at Senate Estimates revealed fewer than 1 per cent of those businesses copped the maximum 200 per cent penalty.
In a statement, an ATO spokesperson said the issue is important.
In its most recent data, the ATO says it received around 28,100 referrals about unpaid super from employees, and that 23,600 of those were finalised. This resulted in $659 million in super being paid, and $300 million in penalties.
The figures don't say how much most employees got back, or what percentage of employers paid a penalty for their failings.
The statement adds that 167,000 employers received reminders or "prompts" to pay unpaid super, and that raised $240 million.
On June 6, Mr Aichinger sent an email to his local federal MP, Emma McBride, and also to Amanda Rishworth, the minister for employment and workplace relations, outlining the issues with his son's superannuation.
Within a week he got a call from the ATO.
"She acknowledged my son had done the complaint online, she said several other employees from the same business had also, and then I quizzed her about, 'Well, why isn't there any feedback or anyone responding back to my son?' Mr Aichinger said.
"She said that they're not allowed to do that … because they haven't got the manpower to do it.
Mr Aichinger says he was told the only time the ATO does respond is if it intends to negotiate a payment plan with the employer.
"I said, 'Well when will you be doing something about my son's situation?' And she said it had been given a case number, but it hadn't been allocated yet."
Mr Aichinger said the ATO representative wouldn't give "any sort of a timeline" on when the issue would be followed up or if there would be an investigation.
The ATO says it cannot comment on the tax affairs of any individual due to its statutory confidentiality obligations.
Mr Aichinger worries his son won't see the thousands of dollars he is owed in super.
"I'm just really disappointed by that. If the ATO is the body who's given the job of policing that, then why are they seemingly under-resourced?
"What happens if the company goes into administration or liquidation? That's $5,000 outstanding in my son's case.
"I think it might be a problem that is quite widespread with some employers in the construction industry."
The Australian National Audit Office looked at the issue of superannuation under-payment in 2022 and found the ATO had identified three "high-risk" industries: construction, accommodation and food services (often called hospitality), and retail.
It called the ATO's activity in dealing with unpaid super "partly effective".
In 2021 there were 220 ATO staff involved in "compliance activity" around super, most of them responding to complaints made by underpaid workers.
"More specifically, 90 per cent were responding to employee notifications," it read.
Currently, it's compulsory for employers to pay their staff superannuation at least every three months.
But, if "payday super" kicks in from July next year, employers will have to deposit super every payday — that's if legislation is passed making it a legal requirement on employers.
Payday super is as it sounds — your super being paid on the same day as your wages.
Some employers already do this, but it's not a requirement. If the law changes, everyone will get their superannuation payments at the same time as their wages.
The chief executive of superannuation clearing house Wrkr, Trent Lund, has just completed a pilot program with superannuation fund Rest in preparation for payday super.
"It was important to test both the experiences and improvement, and actually [test if] it can really deal with the requirements," he says.
Mr Lund says that under current regulations, some businesses are using money that would otherwise be set aside for staff super to smooth over cash flow problems.
"It's gambling, because you're actually using working capital which is not yours — it's actually an employee's future super," he says.
"But it's a pattern that builds over time.
"The more you do it, and [the more] that becomes part of your cash flow workings, in your mind as a leader in a business, it starts to become normalised — and I think that's what we are really trying to change," he says.
He believes payday super is designed to protect workers.
"The frequency of pay is much faster, which means the errors will be detected earlier … so the risk to that employee is much, much less under payday super."
JobWatch principal lawyer Gabrielle Marchetti would welcome payday super.
She's been representing workers for decades, and has seen many miss out on superannuation.
"We know that our callers and our clients are finding it very difficult to chase up super," she says.
"They're very frustrated. They've lodged a notification with the ATO about unpaid super, and months have gone by without them receiving any kind of update.
"People are very frustrated about not knowing where the investigation is at … if in fact the ATO is even investigating their matter."
Those most affected are those most likely to be in vulnerable situations already, she says.
"In JobWatch's experience, the industries typically that people are calling us about unpaid super would be hospitality, construction, retail and cleaning," she says.
"They're often also being underpaid their wages and other entitlements — often very vulnerable clients, often from migrant backgrounds and employed by small businesses."
Technology could play a part in reducing unpaid super.
Single Touch Payroll, or STP, , sends employers' reporting information directly to government agencies.
It was made mandatory in 2019
Before then, employees would get a "group certificate" from their employer at the end of the financial year which would list how much they had been paid, how much tax was withheld, and their superannuation payments.
All of that information is now sent directly to the ATO, and is available year-round through services like myGov.
That's helpful for employees (and accountants), but also to the entity in charge of making sure superannuation is paid correctly: the ATO.
"It gives the ATO the real-time capability to make sure that workers are being paid their super on time and in full with every pay cycle," says Misha Schubert from the Super Members Council.
"So those tools are there — they should be being used by the ATO.
"And, if they're not, then the ATO needs to look at what uplift it can drive instantly to make that happen."
The ATO says it is working with the technology.
"We have invested in comprehensive data matching from employers and super funds to ensure employee entitlements are being paid, and use data matching and risk models to identify where employers may not be paying the correct amount of superannuation for their employees," the agency said in a statement.
This isn't the first time Mr Aichinger has had to advocate for one of his kids.
His eldest son is a fourth-year carpentry apprentice who also struggled with super payments when he started out in the industry.
"His first employer didn't pay any superannuation in the first six months of his apprenticeship … and he left because of it, and reported it to the ATO."
He says the ATO did nothing, and so he called the employer himself.
For workers missing out on around $5 billion each year, advocates are hoping for a better way to get money back — particularly for people without persistent and convincing dads like Richard Aichinger.