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Align PAYG and superannuation contributions: IPA
The Government's proposed changes to super fund notification requirements will be ineffective and expensive to administer according to the Institute of Public Accountants (IPA) who have advocated for the alignment of PAYG and super contributions.
The IPA said under the proposal, employers would be expected to report on super contributions quarterly or half-yearly.
It said members were expected to notice any reduction in contributions and contact the regulator, however, research had indicated that the majority of Australians were not engaged with their retirement savings.
"An email or SMS from your fund may not be sufficient to attract the attention of the employee," IPA chief executive, Andrew Conway said.
Even if only a small number of employers were affected, it was unacceptable that employees should be denied their full superannuation entitlements, according to IPA.
Conway said the proposed strategy would be expensive for employers and required a lot of effort for the employer to maintain records.
Financial stress was the key cause of employers failing to pay superannuation entitlements, and because superannuation payments were separate to PAYG deductions, employers had greater scope to hold on to entitlements, according to the IPA.
The simple way to resolve the issue was to align superannuation payments with PAYG payments, it said.
"By aligning the requirement to pay superannuation payments with PAYG payments and having these payments made direct into the fund or a clearing house, the problem will be more effectively and efficiently addressed.
"Funds will not have to implement expensive changes. Employees will be assured their superannuation entitlements are paid and employers will have one less different payment period to worry about. Everyone wins," Conway said.
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