Industry Super Australia (ISA) has called on the government to mandate more frequent super payments in the May budget, in its pursuit of the end of Australia’s multibillion-dollar unpaid super scourge.
As super payments are often paid quarterly, ISA warned that some employers may be exploiting the misalignment between the super published on a payslip and the amount deposited into an account.
This “outdated law”, ISA explained, has deprived workers of $33 billion over seven years, with workers said to be losing an average of $4.7 billion in unpaid super each year.
ISA modelling showed that a 30-year-old earning the age-based median wage could be $8,000 better off at retirement if paid super fortnightly instead of quarterly, wherein contributions would compound for longer if paid more frequently.
In its pre-budget submission, ISA said its proposal would be cost-neutral over the budget’s forward estimates while delivering significant cost savings in the long term.
Noting that while there would be a modest reduction in company tax collections, this would be more than offset by higher superannuation tax collections.
“Each year, Australian workers are missing out on billions in super that they’ve earned, which is a crushing financial blow for them and their future,” said Super Australia chief executive Bernie Dean.
“At this federal budget, our politicians have an opportunity to end the huge super rip-off undermining the future economic security of many young women and others on lower incomes,” Mr Dean continued.
“Aligning payment of super and wages is the right thing to do by workers, boosts government revenue, lifts investment returns and puts all employers on a level playing field.”
Also in its submission, ISA has pushed for improvements to the Your Future, Your Super reforms by asking the government to end the gaming of the performance test, expand the assessment to all fees and funds and include 10 years of historical fund performance.
Moreover, the collective body is asking for the legislated increases to the Super Guarantee to be maintained, while its coverage, it said, should be extended to gig workers.
Touching on Labor’s intention to legislate an objective of the super system, ISA said it should reflect “what the community think super is for”, which is “savings used solely as income in retirement”.
“Super has been a boon for millions already, but it’s not perfect and there are long-standing issues that the government needs to address to make sure that more women, gig workers and low-income earners get a fairer go,” Mr Dean said.
“Out on the street, people know that super is money that you save for your retirement, and it is this simple notion that should be reflected in any laws designed to protect their financial interests.”
Other inclusions in ISA’s pre-budget submission relate to paying super on the Commonwealth Paid Parental Leave, which the body sees as a priority, and a review of the gender equity of Australia’s approach to retirement incomes.
