One-third of Australians are being underpaid superannuation

Gareth Hutchens, Nick Evershed and Anna Livsey
More than 2.7 million Australians are being underpaid superannuation – or are not being paid it at all. Photograph: Sukree Sukplang/Reuters

One-third of eligible workers in Australia are being underpaid superannuation by their employers, or not being paid super at all.

The average underpayment is worth $2,025 a person each year, and more than 2.7 million workers are affected.

Phil Gallagher, a director of Treasury’s retirement income modelling taskforce between 1993 and 2013, has produced data identifying which electorates in Australia are the worst for employees. It is the first analysis of its kind produced.

The data shows Darwin and Palmerston in the Northern Territory are significantly more affected than anywhere else in the country. It shows there is acute underpayment across central and western Queensland, particularly in Mackay and Rockhampton.

Map showing electorates coloured by the % of people underpaid on super

In Sydney, there is acute underpayment across the city’s south-west, in Campbelltown, Leumeah, Glenfield and Liverpool, and in the inner-city electorate of Sydney.

In Victoria, Traralgon, Morwell and Sale in the east, and Stawell and Horsham in the west, are also badly affected.

Gallagher’s analysis is based on a report he produced for Industry Super Australia in December. That report used the Australian Taxation Office’s 2% sample of records for 2013-14 and matched them with member contribution statements for the same year.

He updated the figures from that report in a submission for Industry Super, which was handed to a Senate inquiry into the non-payment of super in March. The Senate inquiry is due to report on 2 May.

Gallagher estimates the total amount of unpaid super in the 2013-14 financial year was worth $5.6bn, with roughly 610,000 eligible employees paid no super that year.

But his new breakdown of unpaid super by electorate shows the extent of the problem geographically. He says workers with secure jobs and solid employers – such as those working on Sydney’s north shore – are far more likely to receive their full contributions.

Those with less secure jobs are at “significant risk” of being underpaid.

Gallagher told Guardian Australia it was almost impossible for employees to keep track of their ordinary time earnings, on which their super payments are calculated, so many didn’t know what their compulsory super payments ought to be each month.

He believes the problem of underpayment is most prevalent for young and low-income workers. The worst industries are construction, mining, manufacturing and hospitality.

The 20 electorates with the highest estimated super underpayment

“There’s a significant issue with the policy,” he told Guardian Australia. “We’ve had multiple instances in the last few months of employers saying, ‘Oh, we’ve underpaid?’

“I think one of the reasons for the underpayment of super is the government changed the previous award base, which no one ever understood, to ordinary time earnings in 2008, as the [global financial crisis] hit, and employers had a lot of other things to think about and didn’t particularly update their systems, so they just kept doing whatever they’d been doing.”

The 20 electorates with the lowest estimated super underpayment

The data shows 15 of the 25 most-affected electorates are in New South Wales. Seven of the 10 least-affected electorates, as a percentage of eligible employees, are represented by members of the Liberal party, including Kelly O’Dwyer, Josh Frydenberg and Tim Wilson.

Five of the 10 most-affected electorates by percentage of eligible employees are represented by members of the Labor party, including Tanya Plibersek, Warren Snowdon and Chris Hayes.

The Commonwealth Bank was this year accused of refusing to pay the full employer super entitlement to more than 7,000 part-time workers.

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