Are you due unpaid super?

Since it was first introduced 26 years ago, a former employer may have underpaid your compulsory superannuation guarantee (SG) contribution, or worse not paid it at all. To make matters worse, like most employees, you’re probably blissfully unaware of any SG payment shortfall and the impact it’s had on your overall super fund balance.

Based on a recent study by the Industry Super Association (ISA) almost three million Australian workers, just like you, are owed $5.9 billion in unpaid super. Assuming there have been numerous SG non-payments or shortfalls over the years, the losses could amount to thousands of dollars, and that’s without factoring in the impact of compounding returns.

While the superannuation system appears to have made it easy for companies to renege on their SG obligations, all this is about to change. There are moves afoot to ensure any outstanding super not paid to you by a previous employer – since compulsory SG contributions started in 1992 – is finally recovered. Thanks to a recently enacted Federal Government initiative, any unpaid super could land in your account, and you don’t even have to lift a finger.

Comply or harsh penalties in-store

The Federal Government expects companies to make good any outstanding super payments, without penalty for non-compliance, during a 12-month amnesty which started 24 May 2018. The government hopes that by giving companies an entire year to disclose non-payment (during the amnesty), they’ll come forward and pay any SG contributions that remain outstanding.

Companies that don’t take the amnesty seriously, and continue to renege on their SG obligations will live to regret it. There’s a minimum penalty of 50 percent for companies that fail to make good any outstanding SG contributions during the amnesty period. On an equally sobering note, Minister for Revenue and Financial Services, Kelly O’Dwyer has warned of potential jail time for those employers who fail to meet their SG obligations.

Watch out for super balance spikes

Assuming you have been diddled on your super by more than one previous employer, your super balance is likely to experience random top-ups throughout the year. Those who have maxed out their super contributions need not worry about these top-ups pushing them over the concessional contributions cap.

The Federal Government has catered for this eventuality through some ancillary amendments written into its SG amnesty provisions. You won’t be compromised by any lump sum payments made specifically to address an employer’s historical non-compliance.

To ensure that your employer pays you the right SG contributions in future, next year the government is adding a Single Touch Payroll (STP) system to harsher penalties for non-payment. Given that the STP system will provide the Australian Tax Office (ATO) with real-time data, employers are less likely to fall behind on their compulsory SG payments to you in future.