Australia’s $3.9 trillion super system is failing to deliver financial security in retirement to millions of Australians.

Women and those in lower-paid jobs have been the worst hit by the growing problem of employers not paying workers their compulsory superannuation payments.

Under the law, employers must contribute at least 11.5 per cent of their employees’ earnings, but according to new analysis released by the super industry, one in four workers are missing out.

The latest available data shows that in 2021-22 alone, 2.8 million Australians missed out on $5.1 billion in legal super entitlements, and this compounds by the time they retire.

The analysis of Australian Taxation Office (ATO) data by the Super Members Council (formerly Industry Super Australia) found an average underpayment of $1,800 a worker.

Over nine years, the analysis suggests that Australians have missed out on $41.6 billion in unpaid super, with women, people in insecure work, migrant workers and younger workers more likely to have been unpaid.

Men are more likely to work in industries and occupations which have higher rates of underpayment and on average earn more money than women.

The analysis shows men comprised 56 per cent of affected workers in 2021-22, meaning 1.6 million men missed out on $3.4 billion in unpaid super.

But the analysis suggests the impact on women is often worse as they tend to have lower balances and experience other workplace inequities, which compound with the impacts of unpaid super.

About 1.3 million women missed out on $1.7 billion in unpaid super.

The report found that workers in their 20s who earn less than $25,000 a year have a one in two chance of being underpaid their superannuation, and the problem occurs more frequently in industries with lower wages and less stable work patterns.

In 2021-22, blue-collar workers in construction, trades, and transport were the most likely to miss out on super.

The analysis suggests 41 per cent of labourers had unpaid super, closely followed by machinery operators and drivers at 36 per cent, and technicians and trade workers at 31 per cent.

These coincide with industries that experience higher rates of business insolvencies, where unpaid super is common.

The ATO has also identified the retail trade and accommodation food services industries to be in the top three high-risk industries alongside construction in recent years.

Call to legislate faster for payday super

From July 1, 2026, all Australian employers will be required to pay superannuation to their employees at the same time they pay their wages.

This change, which was announced by Assistant Treasurer Stephen Jones in the 2023-24 federal budget, will make it clear to workers when super is owed by their boss.

Mr Jones has described unpaid superannuation as a form of wage theft. 

The change should also give the ATO better visibility to chase down unpaid super in real-time rather than years after the fact.

But legislation is yet to be introduced to parliament.

Super Members Council chief executive Misha Schubert said the government needed to pass the reforms during this term of parliament to avoid a continuing mismatch between wages and super.

“Unpaid super locks too many Australians out of the full transformative benefits of the retirement system and leaves people poorer when they retire.”

She said while the ATO’s compliance action to recover unpaid super has increased, it still, on average, only collects 15 per cent of the nation’s unpaid super bill a year.

The council is calling on the government to set ongoing compliance targets for the ATO on the amount of unpaid super it needs to recover and to make it publicly available.

In the 2023-24 budget, the government announced new targets around the ATO’s compliance activities to help return more unpaid super to members.

However, the super industry said it needs to regularly monitor their effectiveness and that the tax office needs to investigate more suspected cases.

Unpaid super is often discovered when a business goes bust, making it hard for employees to get back their superannuation.

Ms Schubert said the Fair Entitlement Guarantee — which allows eligible workers to claim compensation for unpaid wages, leave, redundancy pay and other entitlements in the case of business insolvency – should be extended to superannuation.

“Legislation to pay super on payday, combined with a stronger ATO enforcement regime and better support for workers to claim their super after insolvencies, is crucial to ensure millions of Australians who are currently being short-changed are paid their super on time and in full,” Ms Schubert said.