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Home > News > 2018 > May > Super underpayment costing workers secure retirement

Super underpayment costing workers secure retirement

savings.jpgWorkers are being denied millions of dollars in superannuation payments each year as employers exploit an under-regulated system.


New stories emerging from hospitality workers paint a bleak picture of exploited workers with little retirement security to look forward to.


Pamela, a 48 year old chef with 30 years’ experience in the industry, described how ongoing failure to pay or underpayment of superannuation from various employers had left her with less than $3,000 in her account.


Another worker, allegedly owed thousands in unpaid super from a Melbourne café employer, has been forced to approach the Fair Work Ombudsman (FWO) to recoup the lost super.


IEUA-QNT Assistant Secretary Rebecca Sisson said in the absence of a well-regulated system with an empowered industrial umpire, it was largely up to employees to ensure their super is being paid correctly.


“It is unfortunately the case that workers must be vigilant about their super, by knowing how much they are entitled to and by checking that these payments are ultimately being made into their account,” Ms Sisson said.


Ms Sisson said the denial of super payments at the time they are owed had a cumulative effect in preventing workers from consolidating and growing their super balances.


“While an underpayment of a relatively small amount of super early in a workers’ career may not seem overly significant, the absence of this money could result in a loss of many thousands of dollars in retirement.


“So many instances of superannuation underpayment and non-payment happen where workers are vulnerable or unaware of their entitlements, such as workers who are paid minimum wage or those who are in insecure work.”


Women workers most affected by super deficiency

Ms Sisson said in addition to concerns about underpayment, many employees – and particularly women employees – face insufficient super in retirement even where minimum payments are met.


“The sad fact is that one quarter of women have superannuation balances of less than $50,000 and on average they are retiring with $85,000 less super than men.”


This gap is caused by a number of factors including the time women spend out of the workplace caring for children, parents and others, as well as the gender pay gap.


“Women continue to be placed at significant financial disadvantage when it comes to their superannuation and this needs to be addressed by employers and government,” Ms Sisson said.


Minimum super insufficient

While these latest stories highlight that many employers are not even meeting minimum superannuation obligations, the base superannuation rate of 9.5% of ordinary wages has long been argued as sufficient to provide a secure retirement.


Currently, all employees who earn more than $450 per calendar month receive superannuation payments from their employer equivalent to 9.5% of their ordinary wages. This payment is referred to as the Superannuation Guarantee (SG).

The former Labor federal government determined that 9.5% SG was insufficient to provide a reasonable retirement and legislated to increase it incrementally to 12% by 2019. The Abbott federal government subsequently froze SG increases in 2014. Further freezes legislated by the Turnbull government mean the SG rate will remain at 9.5% until 2021 and not reach 12% until 2025.

Superannuation co-contribution provides some relief

Ms Sisson said most employees in our sector were fortunate to have access to superannuation co-contribution provisions union members have won over the years.


Superannuation co-contribution provides employees access to additional super, above the SG rate, from their employer on the basis of the employee also contributing a percentage of their earnings into super.


“Due to the strength of IEUA-QNT members, the ability to access superannuation co-contribution exists for the majority of Queensland school staff — including those in the Catholic, Lutheran and Anglican sectors, as well as many independent schools,” Ms Sisson said.

“Members are urged to consider the benefits of accessing superannuation co-contribution.

“Where the provision exists in your collective agreement, simply write to your employer requesting access to the scheme.”

If you require further information or assistance in accessing superannuation co-contribution, contact our union on FREECALL 1800 177 938

Authorised by Terry Burke, Independent Education Union of Australia – Queensland & Northern Territory Branch, Brisbane.