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  • Super guarantee system

    Australia’s super guarantee system commenced on 1 July 1992. Its purpose is to require employers to provide a minimum level of superannuation support for their employees.

    The current system is based on the relationship between an employer and an employee, and the payments an employer makes to their employee’s super fund.

    A legislated portion of an employee’s ordinary time earnings is paid into a super fund by their employer to secure savings for their retirement.

    The super guarantee rate has increased over time. From 1 July 2002, the rate was 9%. This increased to 9.25% in 2013–14. Since 1 July 2014, the super guarantee rate has been steady at 9.5%.

    We recognise the importance of the super guarantee to the community, and its vital role in providing for people’s retirement. Our role is to administer the super guarantee system and the super guarantee charge.

    Employers who do not pay the required amount of super guarantee on time for their employees must pay the super guarantee charge. The charge imposes nominal interest and an administrative charge on top of the super guarantee shortfall (which is calculated on salary and wages).

    The gap in context

    There is a high rate of voluntary compliance in the super guarantee system. Overall, we estimate that employers are paying about 95% of the super guarantee they are required to pay without intervention from us.

    However, the existence of a gap means some employers do not make the correct super guarantee contributions for their employees.

    The estimation of a super guarantee gap benefits administrators, like the ATO, by providing a better understanding of levels of compliance. It also gives us an indication over time of the effectiveness of our engagement and compliance actions. Our actions to reduce the gap focus on changing employer behaviours, providing education, and enforcement.

    Key facts

    Key facts on super guarantee include:

    • In 2017–18, there were about 935,000 employers and 12.4 million employees in Australia.
    • From 1 July 2010 to 30 June 2018, over $2.6 billion has been transferred by the ATO to employees’ super funds on behalf of 1.8 million employees, as a result of our compliance activities.

    From our super guarantee compliance activities we know:

    • About 33,000 reports of unpaid super guarantee are made (by employees and former employees) to us each year.
    • Reports of unpaid super guarantee are received mostly from employees and former employees of small businesses.
    • Drivers of non-compliance may include poor cash flow management by employers, lack of understanding by employers of their super guarantee obligations, low levels of business experience and, in some cases, deliberate non-payment.
    • Insolvency amongst employers means that debts are sometimes difficult to collect on behalf of employees.

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      Last modified: 13 Feb 2020QC 57181