Industry super funds say about 1 million women would be thousands of dollars better off in retirement if the federal government mandated payday superannuation contributions.
Peak body Industry Super Australia is pushing the government to update laws that allow businesses to pay super quarterly, saying the move could reduce unpaid super by at least 15 per cent.
The government will this week introduce separate legislation to help tackle unpaid super, which costs workers billions of dollars a year.
Industry Super said one in four women in feminised industries including childcare, aged care, hospitality and nursing were underpaid super, denying them up to $40,000 in retirement savings.
Its advocacy director, Georgia Brumby, said aligning the payment of super with wages was the right thing to do by workers and would boost government revenue.
In a report, Industry Super said switching to payday super would increase retirement savings for the 4.2 million workers whose super guarantee was currently paid quarterly.
Its modelling found that a 30-year-old earning the median wage could be up to $8000 better off in retirement under the change, which it calculated would be cost-neutral to the federal budget.
“Unpaid super is depriving 1 million women a year of the chance to save for a financially secure future,” Brumby said.
“Paying super on payday will help women claw back more super now, while the government is unable to commit to other equity measures like paying super on paid parental leave.”
The federal government earlier this month rejected a bid by the Greens to get superannuation paid on the government’s parental leave scheme but is considering a move to payday super. Heavily redacted documents released under freedom of information show Treasury investigated the possibility.
‘Unpaid super is depriving 1 million women a year the chance to save for a financially secure future.’
Georgia Brumby, Industry Super
The department said paying super on paydays would add complexity to the tax system, but would “significantly improve” the Australian Tax Office’s ability to act on underpayments.
“Increasing payment frequency allows earlier debt identification, helping to prevent large accumulations of unpaid [super guarantee] in businesses,” the document said.
The government will introduce legislation this week to protect workers from superannuation underpayment.
The most recent Tax Office estimate shows workers missed out on $3.4 billion in unpaid super in 2019-20. Industry Super’s analysis found that more than $1.3 billion of that was owed to about 1 million women, with younger women on lower incomes most affected.
Workplace Relations Minister Tony Burke said the Protecting Worker Entitlements Bill would allow workers not covered by awards or enterprise agreements to take direct legal action to recover unpaid super.
“This government stands against all forms of wage theft and worker exploitation,” he said.
Treasurer Jim Chalmers said the government wanted to ensure all workers received the super contributions they were entitled to.
“Our government will do everything we can to protect super and help deliver a dignified retirement to hardworking Australians,” he said.
Zoe Daniel, the independent MP for Goldstein, said women already had about one-third less super than men at retirement.
“Now we hear that loose rules around when super is paid are leading to one in five women being underpaid and one in four young women being ripped off,” she said.
“Could the system be any more skewed against women achieving economic equality?”
In Daniel’s Melbourne electorate alone, Industry Super’s calculations showed more than 7500 women were missing out on an average of $1354 a year as a result of the current system.
“If this is budget neutral, as Industry Super’s analysis suggests, the government has no excuse for failing to make this overdue change.”
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