What to do if your employer isn't paying super contributions

What to do if your employer isn't paying super contributions

For many Australians, superannuation is seen as a set and forget type of scheme, where you set up your account and your employer pays your contributions. 

Unfourtunately, things don’t always work this smoothly. Checking your payslips regularly to make sure your employer is making the mandatory 9.5 per cent super contribution is a must to ensure a comfortable future.

If you do realise that your super contributions haven’t been made for that pay cycle, or worse, if the problem has been going on much longer, it’s not too late to address it. In most cases, your employer is legally required to be making these contributions at least quarterly and there are avenues you can follow to make sure the problem is rectified.

Known as ‘superannuation guarantee non-compliance’, the government takes these issues seriously and so should you. The Association of Superannuation Funds of Australia (ASFA) estimates that the average person affected by superannuation guarantee non-compliance loses around $4,000 a year and for a 25-year-old, a one-off loss of this amount could equal a total loss of over $14,000 at retirement in today’s dollars.

So if you are concerned, here are the steps you can take to get the issue resolved:

Get your super fund statement

Getting in contact with your super fund and asking for a copy of your member statement is the first step in resolving this issue. You can use your member statement to see when your last super payment was and how much you received.

This can help determine when the problem started and potentially why it’s happening. For example, you may have changed employers or had a change in the way your pay was structured.

You can also use this information to make sure you are getting paid the right amount of super, which is just as important.

Talk to your employer

After you are armed with the facts it’s time to talk directly to your employer. Keep in mind that employers can pay super contributions quarterly if they chose to so if your payslip for this fortnight isn’t showing a contribution that could be the reason.

Make sure that you understand the pay system in your workplace by talking to your boss or HR supervisor about how your payslip can be deciphered and how frequently they make contributions.

Also check that they have the correct details for your super fund of choice. It could be that your super contributions have been going to a fund nominated by your employer. To rectify this, provide your employer with the details of the fund you want contributions to be made to and think about consolidating your funds to help keep track of your superannuation and possibly reduce the amount of fees you are paying.  

Contact the ATO

If you don’t think you’re making head way by talking to your employer then the final port of call is the ATO. The ATO keeps track of all the super funds attached to your name and by logging into their online system you are able to keep track of the payments that have been made or not made.

You can also lodge an unpaid super enquiry online that will require you to provide the ATO with your employer’s details and the exact nature of your complaint.

The ATO will then begin an investigation into your case and contact you when they have updates to report. This is the only way to go about claiming unpaid super and although it could potentially be a lengthy process, it is more than worth it when you consider the importance super will play in your future.

Related links 

Important Information

Advice contained in this article is general in nature and not specific to your particular circumstances.  Before making an investment decision you should consider your own financial situation and the relevant Product Disclosure Statement/s.  We also recommend you seek advice about your own particular circumstances from a licensed financial adviser.  Further information on superannuation can be found at: https://www.moneysmart.gov.au/superannuation-and-retirement. You can find out more information from the ATO at: https://www.ato.gov.au/individuals/super/in-detail/growing/unpaid-super/.

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Learn more about superannuation

What are reportable superannuation contributions?

For employees, there are two types of reportable superannuation contributions:

  • Reportable employer super contributions your employer makes for you
  • Personal deductible contributions you make for yourself

What are reportable employer superannuation contributions?

Reportable employer superannuation contributions are special contributions that an employer makes on top of the regular compulsory contributions. One example would be contributions made as part of a salary sacrifice arrangement.

How do you open a superannuation account?

Opening a superannuation account is simple. When you start a job, your employer will give you what’s called a ‘superannuation standard choice form’. Here’s what you need to complete the form:

  • The name of your preferred superannuation fund
  • The fund’s address
  • The fund’s Australian business number (ABN)
  • The fund’s superannuation product identification number (SPIN)
  • The fund’s phone number
  • A letter from the fund trustee confirming that the fund is a complying fund; or written evidence from the fund stating it will accept contributions from your new employer; or details about how your employer can make contributions to the fund

You might want to provide your tax file number as well – while it’s not a legal obligation, it will ensure your contributions will be taxed at the (lower) superannuation rate.

What superannuation details do I give to my employer?

When you start a job, your employer will give you what’s called a ‘superannuation standard choice form’. Here’s what you need to complete the form:

  • The name of your preferred superannuation fund
  • The fund’s address
  • The fund’s Australian business number (ABN)
  • The fund’s superannuation product identification number (SPIN)
  • The fund’s phone number
  • A letter from the fund trustee confirming that the fund is a complying fund; or written evidence from the fund stating it will accept contributions from your new employer; or details about how your employer can make contributions to the fund

You should also provide your tax file number – while it’s not a legal obligation, it will ensure your contributions will be taxed at the (lower) superannuation rate.

How long after divorce can you claim superannuation?

You or your partner could be forced to surrender part of your superannuation if you divorce, just like with other assets.

You can file a claim for division of property – including superannuation – as soon as you divorce. However, the claim has to be filed within one year of the divorce.

Your superannuation could be affected even if you’re in a de facto relationship – that is, living together as a couple without being officially married.

In that case, the claim has to be filed within two years of the date of separation.

Either way, the first thing to consider is whether you’re a member of a standard, APRA-regulated superannuation fund or if you’re a member of a self-managed superannuation fund (SMSF), because different rules apply.

Standard superannuation funds

If your relationship breaks down, your superannuation savings might be divided by court order or by agreement.

The rules of the superannuation fund will dictate whether this transfer happens immediately, or in the future when the person who has to make the transfer is allowed to access the rest of their superannuation (i.e. at or near retirement).

Click here for more information.

SMSFs

If your relationship breaks down, you must continue to observe the trust deed of your SMSF.

So if you and your partner are both members of the same SMSF, neither party is allowed to use the fund to inflict ‘punishment’ – such as by excluding the other party from the decision-making process or refusing their request to roll their money into another superannuation fund.

This no-punishment rule applies even if the two parties are involved in legal proceedings.

Click here for more information.

Financial consequences

Superannuation funds often charge a fee for splitting accounts after a relationship breakdown.

Splitting superannuation can also impact the size of your total super balance and how your super is taxed.

Click here for more information.

What is superannuation?

Superannuation is money set aside for your retirement. This money is automatically paid into your superannuation fund by your employer.

Can I buy a house with my superannuation?

First home buyers are the only people who can use their superannuation to buy a property. The federal government has created the First Home Super Saver Scheme to help first home buyers save for a deposit. First home buyers can make voluntary contributions of up to $15,000 per year, and $30,000 in total, to their superannuation account. These contributions are taxed at 15 per cent, along with deemed earnings. Withdrawals are taxed at marginal tax rates minus a tax offset of 30 percentage points.

Voluntary contributions to the First Home Super Saver Scheme are not exempt from the $25,000 annual limit on concessional contributions. So if you pay $15,000 per year into the First Home Super Saver Scheme, you have to make sure that you don’t receive more than $10,000 in superannuation payments from your employer and any salary sacrificing.

Can my employer use money from my superannuation account?

No, your employer can’t touch the money that is paid into your superannuation account.

How do you set up superannuation?

Before you set up a superannuation account, you’ll need to check if you’re allowed to choose your own fund. Most Australians can, but this option doesn’t apply to some workers who are covered by industrial agreements or who are members of defined benefits funds.

Assuming you are able to choose your own fund, the next step should be research, because there are more than 200 different superannuation funds in Australia.

Once you’ve decided on your preferred superannuation fund, head to that provider’s website, where you should be able to fill in an online application or download the appropriate forms. You’ll need your tax file number (assuming you don’t want to be charged a higher tax rate), your contact details and your employer’s details (if you’re employed).

What is a superannuation fund?

A superannuation fund is an institution that is legally allowed to hold and invest your superannuation. There are more than 200 different superannuation funds in Australia. They come in five different types:

  • Retail funds
  • Industry funds
  • Public sector funds
  • Corporate funds
  • Self-managed super funds

Retail funds are usually run by banks or investment companies.

Industry funds were originally designed for workers from a particular industry, but are now open to anyone.

Public sector funds were originally designed for people working for federal or state government departments. Most are still reserved for government employees.

Corporate funds are arranged by employers for their employees.

Self-managed super funds are private superannuation funds that allow people to directly invest their money.

What happens if my employer falls behind on my superannuation payments?

The Australian Taxation Office will investigate if your employer falls behind on your superannuation payments or doesn’t pay at all. You can report your employer with this online tool.

How can I increase my superannuation?

You can increase your superannuation through a ‘salary sacrifice’. This is where your employer takes part of your pre-tax salary and pays it directly into your superannuation account. Like regular superannuation contributions, salary sacrifices are taxed at 15 per cent when they are paid into the fund.

What are concessional contributions?

Concessional contributions are pre-tax payments into your superannuation account. The payments made by your employer are concessional payments. You can also make concessional contributions with a salary sacrifice.

When did superannuation start in Australia?

Australia’s modern superannuation system – in which employers make compulsory contributions to their employees – started in 1992. However, before that, there were various restricted superannuation schemes applying to certain employees in certain industries. The very first superannuation scheme was introduced in the 19th century.