Superannuation

Push to remove $450 monthly threshold for superannuation payments as government keeps focus on unpaid super

Emma Koehn /

Superannuation experts and industry groups are leading a push to scrap the $450 monthly threshold for paying staff super, while small business groups continue their efforts to encourage the government to reduce the red tape around super.

The Senate Economics Reference Committee into Superannuation Guarantee non-payments kicked off another hearing in Melbourne today with plans to hear from experts on policies they say would help workers more easily recover super when it has not been correctly paid by an employer.

At the end of 2016 the Senate referred the non-payment of superannuation to the committee, amid estimates that the tally of unpaid super in Australia is as high as $3.6 billion.

Since that time, industry groups have drawn attention to the retirement savings gap between male and female workers in Australia, and put forward a range of suggestions that would result in women being paid more superannuation and make it easier for people to chase unpaid entitlements.

So far more than 50 submissions have been made to the committee by super funds, academic experts and small business groups about the best way to tackle businesses that don’t pay correct super amounts, as well as how to get more into the funds of those on the lower end of the earnings spectrum.

Removing the $450 monthly limit

A number of submissions to the committee have called on the government to remove the current $450 monthly threshold for super payments, as a way to increase the amount flowing into retirement savings for those working in sectors like hospitality and retail.

At present, employers do not have to pay superannuation to staff if they earn less than $450 from their employment each month. This issue has been raised by groups including Women in Super and the Australian Institute of Superannuation Trustees as a serious issue for ensuring women’s welfare in retirement.

These groups are campaigning to remove that limit so that more casual workers also receive super payments each month.

“With the increasing casualisation of the workforce, the $450 threshold will continue to impact on both women and men — many of whom are low income earners and need all the super they can get,” said Eva Sheerlinck, acting chief executive of the Australian Institute of Superannuation Trustees, in a statement on International Women’s Day last week.

But this suggestion has been met with caution from business groups, who warn requiring businesses to meet extra payments might result in some working out rosters so that their staff work less to make up for the super payments SMEs now have to cover.

“That’s another 10%, [if someone earns $450] that’s $45 you have to plan for,” says Peter Strong, chief executive of the Council of Small Business Australia, this morning.

“$45, well, someone will say it’s not enough much money, but it is.”

However, Women in Super Chair Cate Wood said in a statement last week Australia has “tinkered around the edges” of super policy for too long, and this change would help with broader concerns about women falling into poverty in retirement.

“It is time to break with the past and take the fair and rightful step forward by implementing structural changes that deliver real improvements to women,” she said.

Moving the responsibility for super to the ATO

In their submissions to the inquiry, business groups have been keen to that their members are working hard to do the right thing, but that the current system is confusing and leaves the ball in their court when it comes to chasing up super funds over mistakes and errors.

In her submission to the enquiry, Small Business and Family Enterprise Ombudsman Kate Carnell said super payments place a “disproportionate burden” on smaller operators, especially given that most SMEs are trying to do the right thing.

Along with COSBOA, Carnell’s office agrees that Australia should consider shifting super payment responsibilities to the Australian Taxation Office, which would make the tax office responsible for paying super into employees’ funds.

Peter Strong says this model, which would see businesses paying the tax office directly and having the appropriate amount of super then transferred by the ATO to employee funds, would be “immediate red tape reduction”.

“You’re sending off one tax payment to the tax office,” he says of the plan.

At the moment, too much chasing has to be done on the part of the employer to rectify concerns with funds, Strong says, and even the best businesses get confused.

“If you’re the best employer, people still get confused – when you’re dealing with funds yourself, they’re useless,” he says.

Transitioning to monthly payments

Other submissions to the enquiry have called for quarterly super payments to be scrapped, in favour of this being done monthly, in line with employee payment cycles.

However, Paul Drum, head of policy at CPA Australia, told SmartCompany that because not all businesses are currently on automated systems for paying super, any moves on this front would need to have a long transition period to avoid having an adverse impact on SMEs.

“There is no reward for paying before the due date so businesses pay when their obligations fall due and are payable,” he says.

“For smaller businesses that do not have automated systems, a move to monthly payments will not only impact on cash flow management but will also require extra monthly administration.”

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Emma Koehn

Emma Koehn is a former senior SmartCompany journalist.