As we navigate through our working years, diligently clocking in hours and dreaming of the day we can retire comfortably, there’s a critical factor that could be silently chipping away at our future nest egg: unpaid superannuation. It’s a widespread issue that’s costing millions of Australians a significant portion of their retirement savings, and it’s time to shine a light on this problem.
A recent analysis by the Super Members Council has revealed a staggering figure: approximately 2.8 million Australians missed out on $5.1 billion in legal super entitlements in the 2021-22 financial year. That’s one in four workers who are not receiving the superannuation they’re legally entitled to, with the average underpayment amounting to $1,810 per person. This isn’t just pocket change; it’s a substantial sum that could make a world of difference when it’s time to hang up the work boots for good.
The issue of unpaid super is particularly pronounced in certain electorates. For instance, nearly 30,000 people in the Victorian electorate of Lalor were underpaid, while the New South Wales seats of Mitchell, Greenway, and Sydney each had over 26,000 individuals affected. In Queensland’s Forde, New South Wales’ Parramatta, and Victoria’s McEwen, more than 25,000 people in each electorate faced underpayment. These aren’t just statistics; they represent hardworking Australians who are being shortchanged.
The Super Members Council, led by CEO Misha Schubert, is advocating for a solution known as payday super reform. This initiative aims to modernise the super system by ensuring that super contributions are paid on payday, rather than the current legal requirement of once a quarter. The council argues that this reform is fairer for both workers and employers and is urgently needed to prevent further underpayments.
The benefits of payday super are clear: nearly nine million Australians would receive their super contributions sooner, allowing these funds to accrue and compound more frequently. This could translate to an average of $7,700 more in retirement savings—a significant boost that could mean the difference between just getting by and truly enjoying one’s golden years.
Unpaid super isn’t just an inconvenience; it’s a breach of the law that can cost the average worker over $30,000 from their final retirement nest egg. That’s a hefty price to pay for an oversight that can and should be corrected.
Despite the clear advantages, payday super reform has yet to secure bipartisan support. Labor introduced the reforms over 18 months ago and has committed to implementing the laws by July 1, 2026. However, the Coalition has expressed concerns about the impact on small businesses and has yet to fully back the legislation.
The Council of Small Businesses has voiced apprehensions about the ‘significant cost’ the change would impose on employers, payroll software providers, super funds, and the Australian Taxation Office. They argue that the timeline for achieving this change is unrealistic. Yet, it’s worth noting that many employers are already paying super more frequently than quarterly, with 56 per cent of small and medium businesses and a third of micro-businesses doing so as of 2020-21.
Ensuring that every worker receives their rightful superannuation is crucial for securing a comfortable retirement. While payday super reform presents a promising solution, challenges remain in achieving widespread support and implementation.
Have you or someone you know experienced unpaid super? Do you think payday super reform is the right solution, or should other measures be considered? Share your thoughts in the comments below—we’d love to hear your perspective!
Also read: Will $700,000 nest egg be enough?
Pay day superannuation needs to be enacted, by the Parliament and could be actioned by businesses themselves.
Payrolls are being made anyway on a fortnightly, weekly or monthly basis so it should be an easy thing to process. Superannuation is a percentage.
Pay Day Superannuation has been available in Payroll Software for Several Years, and is very simple to setup, basically the same as Quarterly, but done on every Pay Day.
The Information is then automatically communicated to the ATO.