Advisers can help address SG non-payment
Financial advisers can play a key role in helping to detect employer non-payment of the superannuation guarantee (SG) but they need more tools at their disposal including being allowed to give advice to members of default super funds, according to the Association of Financial Advisers (AFA).
In a submission to the Senate Economics Committee inquiry into the non-payment of the SG, the AFA said the experience of its members in dealing with clients and their superannuation “demonstrates that financial advisers can contribute to the monitoring and remediation of unpaid superannuation contributions”.
However it said the effectiveness of advisers in dealing with the issue would be increased with some changes to the monitoring and enforcement framework, such as increasing data-sharing requirements between retail superannuation trustees, the Australian Taxation Office (ATO) and Fair Work Australia, greater payslip reporting where an employer operates a quarterly contribution cycle and prioritising payment of unpaid contributions for businesses in liquidation.
“AFA Members have reported that rectifying structural deficiencies could result in more advisers being able to offer professional services that could mitigate the risks of further superannuation inadequacy to the economy,” the submission said. “Services that could achieve this include advising small businesses on financial sustainability and educating employees on their rights.”
It said this could supplement the role of superannuation trustees, financial auditors and governmental agencies in addressing the problem.
The submission said the AFA considered that several reform measures within the financial services sector and the financial advice profession could be implemented by the Federal Government to better address the problem of unpaid superannuation guarantee (SG) contributions.
Those measured included:
- Greater payslip reporting requirements when an employer operates a quarterly contribution cycle; · Greater data sharing between retail superannuation trustees, the ATO and Fair Work Australia;
- Prioritising payment of unpaid contributions for businesses in liquidation and reviewing the Fair Entitlements Guarantee system to include unpaid superannuation entitlements; Superannuation Guarantee non-payment Submission 58 AFA Submission – The impact of non-payment of the Superannuation Guarantee;
- The ability for financial auditors to measure and advise on superannuation contribution compliance when auditing employer financial statements and to notify the ATO when a failure is detected and they are not satisfied that an employer will be able to rectify;
- Review the current presumption of conflict under section 963B that limits personal financial advice being provided to members of default superannuation funds;
- Review the effect that the unfair dismissal income threshold (currently $138,900 per annum) has on employees reporting unpaid superannuation – especially in the resources industries, trades and professions;
- A clearing house system to facilitate disbursement of employee pay and superannuation on a total employee cost basis where an employer or a sector of an industry has been identified with poor compliance; and
- Introducing fines for non-payment of contributions.
Recommended for you
AMP is to launch a digital advice service to provide retirement advice to members of its AMP Super Fund, in partnership with Bravura Solutions.
Unveiling its performance for the calendar year 2024, AMP has noted a “careful” investment in bitcoin futures proved beneficial for its superannuation members.
SuperRatings has shared the median estimated return for balanced superannuation funds for the calendar year 2024, finding the year achieved “strong and consistent positive” returns.
The second tranche of DBFO reforms has received strong support from superannuation funds and insurers, with a new class of advisers aimed to support Australians with their retirement planning.
