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ABC News
3 days ago
- Business
- ABC News
Australian workers lose more than $4.7 billion a year in unpaid super — and the ATO rarely penalises employers
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.
ABC News
23-06-2025
- Business
- ABC News
HESTA member couldn't access super for surgery due to fund outage, dozens report ongoing issues
Despite normal services resuming three weeks ago, dozens of HESTA superannuation members have contacted ABC News, distressed and frustrated they are still unable to access their own super funds. HESTA, one of Australia's largest super funds with more than 1 million members, went offline at the end of April for a seven-week planned outage, as the fund changed administration providers. Despite the outage ending at the start of June, members have reported that their applications to withdraw funds have still not been processed, while wait times on the phone can be up to three hours. Judy Flynn said she put in an application at the end of April to withdraw funds for a surgery. "I then sent an email saying, 'look, I have a medical appointment coming up, it's urgent, I've been waiting four months for this, can you please process this $2,000 for me?'" But she said she got no response from HESTA, and eventually needed to postpone her surgery, which was meant to be on the June 10. HESTA had told ABC News that members could "still receive urgent and critical payments" during the period of limited services. "I hadn't heard a thing, no response at all … and I tried to get through to them a couple of times on the phone and I couldn't get through without waiting for a long period. "It's very stressful … I'm really angry that they've done this to me," Ms Flynn said. Ms Flynn, who lives on the South Coast of New South Wales, said she recently separated from her husband and has had to borrow money from him to pay for things like utility bills and council rates. "He's been good about it, but he's in debt to loan me money. It's not like he has money stocked away, we're borrowing to get me out of this hot water." On Thursday last week, Ms Flynn was finally able to speak to someone at HESTA who processed her application, stating it should take three to five days to land in her account. On Sunday, she said HESTA notified her that the money had been transferred, about two months after her initial application was made. HESTA has apologised to Ms Flynn, stating its level of service was not acceptable. In a response to the ABC, a spokesperson for HESTA said: "While we resumed online services as scheduled and many members are transacting as normal, we recognise some members have experienced long call wait times and processing delays. Personal finance researcher at Griffith University Whitley Bejah said the extended period of time offline means HESTA has failed in its duty of care to customers. "Let's say someone's been waiting since the first week of the HESTA shutdown to be able to make this claim… now [it's] 10 weeks with no income. "I think that would be very, very stressful from a consumer's perspective." She doesn't think the super fund prepared properly for the influx of applications it would experience from members after the outage. "I understand that the process is really cumbersome and they want to make sure that they get everything right because there are obviously reporting issues … but given everything that people have been through, you think that they would be a little bit more prepared. Ms Bejah said the "additional delay" is causing unnecessary stress for many people right now. "Australians [are] dealing with a lot at the moment, especially with the cost of living, and I think when there's a barrier between people and accessing their own funds that they might need for medical considerations … or they might be dealing with severe financial hardship. "It's a compounding effect that's going to affect a whole range of things, not just finances." The spokesperson for HESTA said: "We have substantially increased the size of our contact centre team and operating hours have been extended to include temporary operation on Saturdays. Amanda Lewis recently went into a dementia ward at a nursing home in Victoria and has been relying on her superannuation to pay for it. Her husband Glynn has been acting as her carer because her short-term memory and some of her long-term memory have been affected by the disease. He said on May 22, he and his financial adviser put in an application to withdraw all of Ms Lewis's superannuation. But almost a month later, none of it has been processed into her account. "I'm sort of still in limbo … it is a little bit up in the air, hopefully HESTA come good with the finances," he told ABC News. "Hopefully we can get back to a better financial situation." While his financial advisor has lodged a complaint with HESTA, he has concerns that if he doesn't get access to the funds soon, he will have to use his own super to pay the deposit, or risk his wife losing her spot at the facility. The spokesperson for HESTA said: "We apologise to the member and her husband who have not received the service they should expect from us. HESTA isn't the first superannuation fund to have complaints raised against it this year. The spotlight was thrown on the sector in April, when AustralianSuper, Rest, Hostplus, Insignia and Australian Retirement Trust were impacted by a slew of cyber incidents. AustralianSuper was questioned by its own clients about a security weakness in its accounts, before cybercriminals stole hundreds of thousands of dollars of members' retirement savings. Customers told ABC News they had asked for multi-factor authentication (MFA) on their accounts but were rebuffed — one of them just weeks before the cyber attacks. Subsequently, the Australian Prudential Regulation Authority (APRA) wrote to all registrable superannuation entities earlier this month, reinforcing expectations around information security and the implementation of robust authentication controls. "This action follows recent credential stuffing attacks that exposed persistent weaknesses in authentication practices across the superannuation industry," the APRA statement read. The regulator has advised all super funds to ensure MFA or equivalent protections are in place for high-risk activities no later than August 31 this year. Separately, the corporate watchdog has called on super funds to overhaul the way they deal with death benefit claims, noting excessive delays, poor customer service and ineffective claims handling are leaving Australians worse off at some of the most vulnerable times of their lives, in a scathing report issued in March.
Yahoo
20-06-2025
- Business
- Yahoo
Government's pension merger plan could cost Brits millions
The government has announced plans to merge pension pots, but the move could cost Brits millions of pounds, experts have warned. The police was originally a Conservative one, belonging to the 86 funds in the Local Government Pension Scheme, which collectively holds the retirement savings of 6.7 million Brits who are or have been employed by local government. Now, the Labour government has brought it back as part of the Fit for Purpose consultation, which aims at reducing the costs involved in managing the investments. Read more: Millions of UK households told to spend £49 before end of Friday However, experts have raised concerns about its implementation, with the LGPS addressing the issue at the Pensions and Lifetime Savings Association's annual local government conference in Bedford, the Daily Express reports. Under the proposals, government and regulatory approval needs to be given for a fund to set up as a superfund. If it does not get approval, it will need to merge with a fund that has got approval. Jennifer Devine, head of Wiltshire pension fund, part of the Brunel Pension Partnership said: 'This is going to be a really costly process for us as well, those 21 funds who didn't get the green light to go forward are being quite heavily penalized here. 'Really, there will be costs in leaving our pool. You can't move billions of pounds without spending millions of pounds. "The understanding I have from speaking to the central government is that that's just on us. Those are on our costs, and we just have to weather them.' The Express spoke to other delegates, with one saying: "When a fund doesn't get permission to go forward, and therefore has to merge with a fund that has then what happens is that you are effectively winding up a company, in order to merge with another." "Think of all the costs involved in that, it's not going to be cheap and it could run into the billions of pounds." Another delegate said: "It won't be the pension funds paying the costs, because these pensions are guaranteed to pay out, any cost will have to be met by central government which means the taxpayer." Join our dedicated BirminghamLive WhatsApp community for the latest updates sent straight to your phone as they happen. You can also sign up to our Money Saving Newsletter which is sent out daily via email with all the updates you need to know on the cost of living, including DWP and HMRC changes, benefits, payments, banks, bills and shopping discounts. Get the top stories in your inbox to browse through at a time that suits you.
