Major $1,800 superannuation problem costing millions of workers: 'Poorer when they retire'

Aussie workers are missing out on $5.1 billion in superannuation entitlements, new analysis has found. The unpaid super scourge is costing Aussies much-needed retirement funds at a time when the amount needed continues to go up.

Around 2.8 million Aussie workers - or one in four people - were short-changed on their superannuation entitlements in 2021-22, analysis by the Super Members Council found. That is costing the average worker $1,800 a year, or more than $30,000 by the time they retire.

Women, people in insecure work, migrant workers and younger workers were the most likely to have unpaid super, the advocacy body found. Workers in their 20s who earn less than $25,000 a year had a staggering one in two chance of being underpaid.

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The Super Members Council said a “key driver” of unpaid super was the "outdated" practice of having super paid once a quarter. The federal government announced in May 2023 that it would make it compulsory for employers to pay super with wages from July 1, 2026.

That legislation still hasn’t been introduced to parliament and Super Members Council CEO Misha Schbert said the “clock was ticking”.

“Paying super on payday will modernise the super system and should hugely reduce underpayments. It’s an excellent example of reform to benefit super fund members, which will make super fairer for workers and employers alike,” Schubert said.

“Unpaid super locks too many Australians out of the full transformative benefits of the retirement system and leaves people poorer when they retire. A unified push is needed to stamp it out.”

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The group noted that while the Australian Taxation Office (ATO) had lifted compliance action to recover worker’s unpaid super, it was still only collecting 15 per cent of unpaid entitlements.

It is calling for the government to set compliance and recovery targets for the ATO, along with extending the Fair Entitlement Guarantee - which allows workers to claim compensation for unpaid wages, leave and other entitlements - to super.

Amount needed to retire increases

The Association of Superannuation Funds of Australia (ASFA) recently revealed a single person now needs to have at least $52,085 per year to enjoy a comfortable retirement, while a couple requires at least $73,337 per year. This data is based on the assumption that they own their own home.

The amount has risen 0.9 per cent in the June quarter and 3.7 per cent over the past 12 months.

ASFA noted that home, vehicle and private health insurance costs went up in the June quarter, which have squeezed retirees' savings even more.

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