Super contributions loophole hurts average earners
The loophole that allows employers to effectively pocket the benefits of employees' additional sacrifice super contributions has affected mostly average earners who make less than $80,000 per year, Industry Super Australia (ISA) said.
The ISA analysis said that the latest Australian Taxation Office (ATO) data found that 2.4 million Australians were not being properly paid their super contributions.
According to ISA's chief executive, David Whiteley, the legal loophole would deliver a billion dollar hit to the retirement savings of 360,000 Australians on top of the $3.6 billion in unpaid super.
The average loss for a middle earner, caused by this loophole, was $2,900.
"Salary sacrificing additional super contributions is an important way to boost final retirement savings — but it will only help if it is on top of the compulsory 9.5 per cent paid by employers," Whitley said.
"While there is a legal loophole there for the employers to reduce their contributions it is not what common sense and fairness would dictate.
"Reliance by some employers on this loophole significantly undercuts efforts by their employees to increase their retirement savings."
ISA also stressed that closing the loophole as well as the requirement that super contributions were paid at least monthly, rather than quarterly, should be a priority for the Government.
AUTHOR
Oksana Patron
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