Almost two thirds of workers hit by a superannuation salary sacrifice ‘loophole’ earn less than $80,000 a year, according to analysis of ATO data by Industry Super Australia.
Industry Super Australia (ISA) is calling for the “loophole” which allows salary sacrifice superannuation contributions to be counted against Super Guarantee obligations – reducing the amount of super an employer needs to pay at the cost of the employee – to be closed.
61% of those affected by this so-called loophole earn under $80,001 a year, according to the analysis by ISA. Across all income ranges the issue affects 358,450 employees, with an “average amount underpaid” of $3,891.
“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% paid by employers,” said David Whiteley, Chief Executive of Industry Super Australia.
“While there is a legal loophole there for 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.”
“Until the loophole is closed employees should check the arrangements applying to them and seek agreement with employers to maintain their 9.5% minimum employer contributions on their full pay, on top of any salary sacrificed amount.”
“Closing the loophole must be a priority for Government along with requiring super contributions are paid at least monthly rather than quarterly.”
According to research conducted by Industry Super Australia and Cbus 2.4 million Australians are not being paid their full super entitlements, with the underpayment calculated at $3.6 billion in 2013/14 – excluding the issue with salary sacrifice.