Underpaid super affects one in four workers, with billions never recovered

One in four Australian workers are underpaid superannuation by their employers, amounting to about $6 billion each year, with independent reports showing only about 15 per cent is ever recovered by the tax office.

The figures come as no surprise to Pauline Devin and Angela Noack, who were underpaid around $5,000 and $3,000 respectively in super while working at a Brisbane dental clinic two years ago.

Early last year, the oral health therapists filed separate complaints with the Australian Taxation Office (ATO), and the regulator found in their favour in April.

But 18 months later, neither have seen a cent returned to their super fund or received any further information from the ATO.

"All I ever used to get was, 'No, we can't give you any information because it's an invasion of privacy'," Ms Devin said.

"I wasn't asking for financial details or anything like that.

"I just wanted to know when I could maybe, possibly, think about getting that superannuation paid to me."

The long wait and lack of information from the ATO has left Ms Devin and Ms Noack feeling helpless.

"I have come to the conclusion I'm probably not ever going to get my super paid from [my employer] at this point, and the ATO don't seem to be really going in to bat and doing anything about recovering that either," Ms Noack said.

"The ATO is just useless and hopeless."

The ATO declined the ABC's request for an interview but a spokesperson said in a statement it was "serious about ensuring employers comply with their super obligations and dedicates significant resources to educating employers, undertaking audits and debt recovery actions after liabilities have been raised".

The spokesperson also reiterated the ATO's position that "tax secrecy and privacy laws limit what the ATO can disclose to employees" and said where the tax office collects unpaid super on behalf of employees, it advises them accordingly.

Funds hire private firm to recoup super

Industry Fund Services collects unpaid super on behalf of three super funds, in a role similar to the ATO's regulatory responsibilities.

But the firm's executive manager of super recoveries Natalie Lister said the organisation took a more "proactive approach" to super debt recovery.

"We'll use digital communications, SMS, email … outbound calls and that's where our specialist team really come in … and [get] an understanding of the employer's situation and working with them to actively resolve it," she said.

"If we don't have any success early on, we then have escalation processes, so we'll follow up with … what we call a final demand call and then at that point, we will actually threaten to take legal action."

Ms Lister said in most cases, the digital communication and phone calls were enough to successfully engage employers, with only about 10 per cent of cases escalated to the "final call and letter of demand".

She said the firm had for years used data provided by its super fund clients to contact employers who were not paying super, avoiding the need for employees to discover and then flag the discrepancy themselves.

"We'll try and contact the employer as soon as we can to find out if there is any super payments overdue," she said.

"Our experience has largely seen that the ATO, if they are going to intervene, it's much further down the track."

Payday super needs to be 'backed in action'

On July 1 this year, the ATO introduced payday super, meaning employers are now required to pay workers their super at the same time as their wages.

Super Members Council chief executive Misha Schubert said the reform was a "game-changer" for the industry because it offered workers and the ATO "real-time visibility" of their super.

However, Ms Schubert said the new laws needed to be "backed in action by the tax office taking more proactive action".

"[The ATO] now has the tools and the visibility in real time to go and ask those proactive compliance questions of each employer."

The ATO spokesperson told the ABC it used "multiple data sources to help identify non-compliance, including single touch payroll (STP), super fund reporting [and] employee and third-party referrals" to "proactively identify and pursue unpaid superannuation".

The spokesperson also pointed to the regulator's own data, which shows 92 per cent of super contributions by dollar value are paid voluntarily by employers.

However, Ms Schubert and her colleagues said that figure hides the impact on the ground, where one in four workers, who are often in low-paid jobs, are short-changed on their super.

Ms Schubert also said, on average, only 15 per cent of unpaid superannuation was recovered by the ATO — a figure backed by a 2022 Australian National Audit Office report.

Calls for more transparency, safety net

Ms Devin — who is now retired — and Ms Noack said they felt "frustrated" by the system and wanted to see the ATO do more for workers.

"I think the ATO needs to be more transparent as to what they're doing to recover unpaid super," Ms Devin said.

Ms Schubert said the experience the two Brisbane workers had with the ATO was "heartbreaking and completely unacceptable".

"There should be a much clearer, simpler process for keeping workers updated," she said.

"So having a clear contact person, having regular updates provided to those workers and having real visibility on what's been happening in the process."

Ms Schubert said where the ATO cannot recover super owed to workers because, for example, an employer is insolvent, the federal government should improve the safety net offered to employees via the Fair Entitlements Guarantee.

"The Fair Entitlements Guarantee scheme covers wages, leave and any redundancy that should have been paid in those circumstances, but it does not yet include super [and] we think it absolutely needs to include any unpaid super," she said.

A spokesperson for the federal government said since July, 2024, it had "strengthened" the scheme's recovery program, which now allows liquidators funded by the government to "actively pursue unpaid superannuation guarantee charge amounts in eligible insolvencies and improve recovery outcomes".

Ms Devin and Ms Noack said as women who took leave to care for children and aging parents, their experiences had left them feeling even worse off.

"You're already behind the 8-ball as a mother or as a non-working parent … and then to not get what you're entitled to," Ms Noack said.

"Every little bit counts in this economy and retirement is scary, you want to make sure you have enough to live on and you've done the work and you should be paid what you're legally entitled to."

"You can do everything right and if your employer doesn't pay it, then you're the one penalised," Ms Devin added.