A string of company insolvencies in 2013 lead to around $190 million in unpaid superannuation to employees that will never be recovered, according to reports.
The Australian Taxation Office says that an additional $15 million in payments were not paid because it was not economical to follow them up, Fairfax reports.
The large sum was revealed in evidence given by the ATO at a parliamentary committee hearing last week, Fairfax says.
Things are not looking better for the current financial year, with the amount of super lost due to insolvency at $81.3 million so far, while another $7 million has not been chased, the report says.
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Australian Institute of Superannuation Trustees executive manager of policy and research David Haynes told SmartCompany that while $190 million is a lot of money, it is still a “drop in the ocean” in comparison to the billions of dollars companies pay to Australian staff in superannuation each year.
He says the “majority of businesses are good corporate citizens” and do pay super regularly.
“There are a small proportion of employers that don’t take super seriously or are under financial stress,” he says.
He explains that as businesses reach financial trouble, paying super can be one of the things they push to the bottom of their priorities, which leaves staff in the lurch if the company becomes insolvent.
In cases where businesses only pass on super collected to superannuation companies quarterly, it can be easy to accrue large sums that are owed.
Haynes says the previous federal government reviewed where employees stand when it comes to the hierarchy of creditors in an insolvency. However in many cases of insolvency, there are no funds to offer regardless.
“If you are a small business, our advice is to pay super regularly rather than quarterly (such as weekly or monthly),” he says.
“If you are an employee, I suggest that you are in a super fund that has a website with member access that allows you to look up your account and check the frequency of contributions from your employer.”
Haynes says employers may put on a payslip that they have accounted for super, but they may not regularly pass on those funds to the superannuation companies.
Haynes says as part of the Stronger Super changes implemented on January 1 this year, employers are required to add more details to payslips about how they are handling super payments. However he says regulations for this are not yet concluded.