Fixing Unpaid Super: A Fairer System for Workers and Employers

Super Members Council for a typical worker.

Addressing the broader implications, Ms. Wawn noted that tackling the deeply ingrained culture of disregard for the rule of law is necessary to combat criminality and corruption effectively. She expressed hope that this administrative intervention would pave the way for a more constructive and mutually respectful relationship between employers and unions.

Ms. Wawn also called on industry participants to report any misconduct or potentially unlawful activities involving the CFMEU to the Fair Work Commission, emphasizing that lasting change requires ongoing regulatory reform. “If we don’t learn from history, we will be doomed to repeat it. Permanent and lasting change demands long-term regulatory reform,” she warned.

In conclusion, Ms. Wawn urged the Federal Government to establish a dedicated building and construction industry watchdog with the authority and resources needed to enforce compliance effectively. “Australians expect a thriving and safe building and construction industry to deliver the roads, hospitals, schools, and most importantly, housing that they are crying out for.

Master Builders will continue to work collaboratively with both the Government and Opposition to achieve a strong, safe, and prosperous sector,” Ms. Wawn concluded.

The ongoing issue of unpaid superannuation in Australia remains a significant concern, with a staggering $5 billion lost annually, depriving millions of Australians of the full benefits of the country’s world-leading superannuation system.

The Super Members Council (SMC), representing the interests of 11 million Australians with retirement savings in profit-to-member super funds, is calling for urgent legislative reform to address this persistent problem.

The Unpaid Super Crisis

A new report from the SMC highlights the scale of the unpaid super crisis, revealing that in the 2021-22 financial year alone, 2.8 million Australians were shortchanged by $5.1 billion in legal super entitlements. Over the past nine years, the total amount of unpaid super has reached $41.6 billion, with the average affected worker losing $1,800 annually. This shortfall could translate into more than $30,000 less in retirement savings

The problem is particularly severe among women, people in insecure work, migrant workers, and younger employees. Workers in their 20s earning less than $25,000 a year face a one-in-two chance of being underpaid their super.

The Need for Reform

A major contributor to the unpaid super issue is the outdated system that allows superannuation payments to be made quarterly, rather than aligning with wage payments. This gap makes it difficult for workers to track underpayments and hinders the Australian Tax Office (ATO) from using real-time monitoring tools effectively.

While the Australian Government has pledged to implement payday super reforms by 2026, the necessary legislation has yet to be introduced to Parliament, and the specifics of its implementation remain unclear. SMC CEO Misha Schubert has emphasized the urgency of enacting these reforms within the current term of Parliament, allowing businesses to plan and ensuring that millions of Australians receive their superannuation in full and on time.

“Paying super on payday will modernize the super system and should significantly reduce underpayments,” said Ms. Schubert. “It’s an excellent example of reform that benefits super fund members and makes the system fairer for both workers and employers.”

Enhancing Compliance and Support

The SMC is also pressing the government to set clear compliance and recovery targets for the ATO, a commitment made in 2022 but not yet realized. Although the ATO’s efforts to address unpaid super have increased, they currently recover only about 15% of the nation’s unpaid super each year.

Moreover, unpaid super often comes to light only when businesses go bankrupt.

To address this, the SMC advocates for extending the Fair Entitlement Guarantee—a compensation scheme of last resort for workers— to include unpaid superannuation.

A Unified Effort

Ms. Schubert stressed the importance of a unified approach to solving the unpaid super problem, combining legislative action, stronger ATO enforcement, and enhanced support for workers to claim their super after insolvencies. “We stand ready to work with the Government, Parliament, and other key stakeholders to enact these pivotal reforms and ensure Australia fixes the stubbornly persistent unpaid super problem,” she said.

The SMC’s call for reform is a critical step toward ensuring that Australia’s superannuation system works fairly for all workers and that businesses are held accountable for their obligations. By addressing unpaid super, the country can better secure the financial futures of millions of Australians and create a more equitable system for everyone involved.