PETER RYAN:
Superannuation can be an eye-glazing topic that many workers choose to set and forget. But anyone salary sacrificing into super should take a closer look, given that some employers have been exploiting a legal loophole, which lets them hold back payments into an employee’s account for up to four months. But not for much longer says financial services minister Kelly O’Dwyer, who’s cracking down on unscrupulous bosses, who short-change their staff to boost their cash flows.
KELLY O’DWYER:
Well some employers have in fact been doing the wrong thing, they haven’t been maximising the amount that employees can receive in terms of their superannuation guarantee because they have instead been using the employee’s salary sacrifice amount into superannuation to satisfy their obligation under the superannuation guarantee laws that we have at the moment. And that’s less money for the employee at the end of the day in terms of their superannuation guarantee that’s paid.
PETER RYAN:
But when it comes to the salary sacrificing, they’re using a loophole and at the moment, that’s legal right?
KELLY O’DWYER:
They are using a loophole right now and that is why the Government has moved very swiftly to announce that we will close this loophole. So it’s not right for employers to be unscrupulous in using this loophole and reducing the amount that they’re paying to their employees as part of their superannuation guarantee obligations.
PETER RYAN:
Now, this slippery behaviour by some employers is something that their workers would not be aware of, which means that their superannuation nest eggs, or their retirement nest eggs, would not be as good as what they would be thinking.
KELLY O’DWYER:
We are acting very swiftly to close it down because we want people to have the most amount available in their retirement. We want people to be able to salary sacrifice and receive their superannuation guarantee obligations.
PETER RYAN:
So while at the moment it is a legal loophole, it’s not ethical behaviour. Would you go as far to say that some employers might be cooking their books, that they’re using this money to improve their cash flow?
KELLY O’DWYER:
Clearly we don’t think it’s right, it’s simply not the right thing to be doing.
PETER RYAN:
Concerns about unpaid super late last year sparked a higher level investigation involving the tax office and the financial regulators ASIC and APRA. Industry Super Australia, which claims that around a third of Australian workers have lost a collective $6 billion, has welcomed a crackdown. But its head of public affairs, Matt Linden, says regulators have much more to do when it comes to protecting retirement nest eggs.
MATT LINDEN:
Well look, this report and the step to close the salary sacrifice loophole will be welcome, but it’s really just the tip of the iceberg when it comes to the unpaid super problem.
PETER RYAN:
This relates to salary sacrificing mechanisms that some people might use, but what other areas of concern are there when it comes to unpaid super or employers holding back super?
MATT LINDEN:
Well look, the main thing, and the main problem, relates to employers who are not paying any superannuation at all, rather than simply just reducing their payments on account of employee sacrifice amounts, so that’s where the bulk of the problem is and that’s the one which is most damaging to retirement savings. So closing this loophole won’t address that particular problem.
PETER RYAN:
Kelly O’Dwyer is talking tough, referring to unscrupulous bosses ripping off their staff. But how big a problem is it really, when it comes to the exploitation of loopholes? Scott Barklamb, manager workplace relations at the Australian Chamber of Commerce and Industry, says it’s just a few bad apples.
SCOTT BARKLAMB:
Well there certainly is always non-compliance in almost every area of our community, every area with complying with our tax laws and super laws, but Australian employers spend millions of dollars to try and do the right thing on superannuation. We understand it’s an entitlement of our employees, it’s really going back to its origins, foregone wages, most employers seek to do exactly the right thing, even to support their employees to manage their retirement incomes through self-managed superannuation and salary sacrifice and we’re keen to continue to do so to comply with the law and do what’s right.
PETER RYAN:
But if this legal loophole is removed, will that be a problem for employers?
SCOTT BARKLAMB:
Employers will have to make an adjustment and we’ll be looking to work with the Government to ensure that the legislation works with business and we seek to make our best contribution, making it as efficient and practical as possible.
PETER RYAN:
In addition to rogue employers, the Government is pushing to make banks more accountable, pushing hard to avoid a royal commission, which Labor has committed to. One proposal is to allow the banking regulator, APRA, to remove or disqualify directors and to ensure there are financial consequences for individuals. At the moment, APRA needs to go to the Federal Court, so potentially more powers for regulators to crack down on dodgy bank behaviour, which continues to be a hot issue for the Government.