A LOT of legislation related to superannuation is being passed. However, one piece of legislation that was ALP policy does not seem to have been introduced yet.
QI work in the community sector and my employer recently offered me a salary-sacrificing package of $15,000 a year. However, I now realise my employer is not paying superannuation on this $15,000 so the super contributions have fallen by about a third. Is it normal, legal and/or proper for my employer not to pay super on this component of my income?
AThe practice of an employer reducing the amount of superannuation guarantee contribution when an employee packages some of their salary, while not proper or fair, is legal.
The Labor Party had a policy to force employers to make the 9 per cent super contribution on an employee's salary before it was reduced by voluntary salary sacrifice contributions. As far as I know this policy has never been acted on and it is still legal for your employer to do this.
QI am a public servant nearing my 69th birthday. Is it part of the new super changes to lift the age limit on compulsory employer contributions from 70 to 75 in the Public Sector Superannuation Scheme and will it be in time for my 70th birthday in 2013?
AUntil the legislation passes both houses of Parliament, increasing the compulsory employer super contribution age from 70 to 75, it is hard to give you a definitive answer. If the fund you are a member of is an accumulation fund, unless the legislation specifically excludes public sector employees from the increase in the age limit, extra contributions should be made once you turn 70.
However, if the superannuation fund is a defined benefit fund your final benefit is not determined by employer contributions.
In these funds, the pension or lump-sum benefit depends on an employee's years of service and their final average salary. In some cases, a person's maximum benefit is reached when they turn 55.
QI recently was out of a job when the company I worked for went into liquidation. During the time with the company I was never paid super. I lodged a complaint with the Tax Office and an assessment was made, but I have yet to see the super payment. What happens if the money is not recovered by the liquidators?
AThere is new legislation that will mean directors of a company will be personally liable for superannuation guarantee contributions that are more than three months overdue. The legislation will only apply to unpaid contributions from July 1, 2011, but, as it has not been passed yet, you may not benefit from it.
If the liquidators can't recover sufficient funds to pay your superannuation contributions, and the directors of the company do not get caught by the new legislation, there is nothing you can do. In addition, if the directors don't own any assets, they could still escape their responsibilities.
Questions can be emailed to super@taxbiz.com.au
Max Newnham's book, Funding your Retirement: A survival Guide, is available in book stores and as an e-book.
Frequently Asked Questions about this Article…
Is it legal for my employer not to pay superannuation on a salary-sacrificed amount?
Yes — while it may seem unfair, the article explains it is legal for an employer to reduce the superannuation guarantee contribution when you salary-sacrifice part of your pay. The practice is not considered proper or fair by some, but it remains lawful unless legislation changes.
Wasn't there a rule to make employers pay the 9% super on pre-salary-sacrifice pay?
The Labor Party had a policy to force employers to make the 9% super contribution on the employee’s salary before voluntary salary-sacrifice amounts reduced it. According to the article that policy hasn’t been implemented, so employers can still legally reduce SG when salary packaging unless the law changes.
If I'm a public servant near age 70, will compulsory employer super contributions be extended to age 75?
The article notes proposed legislation to lift the compulsory employer contribution age from 70 to 75 for the Public Sector Superannuation Scheme. However, until that legislation passes both houses of Parliament there’s no definitive answer. If the change is enacted and your fund is an accumulation fund, extra contributions may continue past 70; defined benefit funds work differently (see below).
How do defined benefit superannuation funds affect employer contributions and my retirement benefit?
In a defined benefit fund your final pension or lump-sum isn’t driven by employer contribution amounts. Instead it’s based on years of service and your final average salary. In some defined benefit arrangements a person’s maximum benefit can even be reached well before age 70, sometimes around age 55.
What can I do if my employer went into liquidation and never paid my super?
If liquidators can’t recover enough funds and directors aren’t found personally liable, the article says there may be nothing you can do to recover unpaid super. An assessment by the Tax Office can be lodged, but recovery depends on the company’s assets and whether directors are caught by any director-liability rules.
Is there proposed director liability for unpaid superannuation, and when would it apply?
Yes — the article describes new legislation that would make directors personally liable for super guarantee contributions more than three months overdue. That measure would only apply to unpaid contributions from July 1, 2011, and because the law hadn’t passed at the time of the article, not everyone with unpaid super would necessarily benefit.
Who can I contact with questions or to complain about unpaid superannuation?
The article gives an email contact for questions about super: super@taxbiz.com.au. You can send enquiries there as suggested in the piece.
Where can I find more plain-English guidance on funding my retirement?
The article recommends Max Newnham’s book, Funding your Retirement: A survival Guide, which is available in book stores and as an e-book for more practical guidance on retirement funding.
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