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Around one in five women are being underpaid superannuation, according to the most recent Industry Super Australia (ISA) analysis of the 2019-20 tax file, costing roughly one million women an aggregate of $1.3 billion a year.
The ISA report said Australian women had missed out on $10.8 billion in super payments over seven years,
Feminised industries like childcare, aged care, hospitality and personal services face the underpayments the most, with about a quarter of female workers suffering super underpayments, costing them up to $40,000 less super in female retirement nest eggs.
For some, this is the equivalent of 10 per cent of their savings.
ISA stated one in four women under 40 had been “ripped off”, as almost 40 per cent in their 20s who earn less than $25,000 were short-changed $570 a year.
“It is a crushing financial blow that many women — who are still retiring with a third less super than men — won’t recover from and can wipe out 10 per cent of their savings,” ISA Advocacy Director Georgia Brumby said.
ISA said it remained a fact that women changed career patterns more often than men, but this should not be to the detriment of future super retirement funds.
However, on average, older women nearing retirement have a third less super than men and already earn less compared to other male-dominated industries.
ISA said while most bosses complied with super pay, others would exploit outdated laws and even hide underpayments.
Some are even caught using employee super to manage company cashflow only to accumulate large super labialises they later cannot meet.
What Can Be Done?
ISA’s analysis revealed that if super were to be paid fortnightly instead of quarterly, the average 30-year-old would be $8000 better off at retirement.
This is because more frequent payments allow for a longer period of compounding interest, which can result in a higher overall return on superannuation.
Paying super on payday would also help employees better track their payments, making it far easier to notice if super had gone unpaid.
“Aligning payment of super and wages is the right thing to do by workers, it boosts government revenue, lifts investment returns and puts all employers on a level playing field,” Ms 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.”
Payday super would be cost-neutral for the Federal Government and if enacted could easily change the lives of thousands of women to receive stronger super contributions toward retirement.
The ISA also estimates that payday super could reduce unpaid super by up to 15 per cent and boost the retirement savings of all 4.2 million Australian workers who receive quarterly super pays.
While the taxation office has welcomed the National Employment Standard to boost its 15 per cent recovery rate of unpaid super, this will void the problem at its source.
The Super Industry said a better option would be to include super in the Fair Entitlements Guarantee to act as a government safety net that paid worker entitlements when businesses went bust.
