Cbus chairman and former Victorian premier Steve Bracks is pushing to protect your super. Picture: Jason Edwards

Under the law, employers must contribute 9.5 per cent into the superannuation account of every worker over the age of 18 and earning more than $450 a month.

But according to the analysis of ATO and ABS data, conducted by Industry Super Australia and Cbus, around 2.4 million workers missed out on $3.6 billion in payments in 2013-14. That equates to $1489, or almost four months of super for the average worker.

Younger workers, low-income earners and workers in the construction, hospitality and cleaning industries were most likely to miss out, and small and medium-sized businesses were the most likely to be the culprits.

“We have stories of workers who’ve put faith in the system only to discover months later that their super, including extra voluntary contributions, has not been paid into their accounts and is lost completely when companies move into liquidation,” Cbus chairman Steve Bracks said.

“It is not unusual to hear from members who have lodged a complaint with the ATO still waiting for answers, let alone their money, years afterwards. One has told us he was advised recovery of unpaid super may take up to 10 to 20 years.”

The lost super came from two components: the underpayment of super for PAYG employees and sham contractors, estimated at $2.8 billion, and unpaid superannuation for workers in the cash economy, adding another $800 million.

The report estimates that without action, unpaid super and lost earnings will reach $66 billion by 2024. “It is disturbing that nearly one third of workers eligible for superannuation are being short-changed,” Industry Super Australia chief executive David Whiteley said.

“The implications are wider than the individual. Today’s retirement income policies are made on the assumption that, into the future, we’ll all have super. As pension access tightens and home ownership declines, those missing out on compulsory super stand little chance of a decent standard of living in retirement.”

And if you think because the superannuation contribution is listed on your pay slip the money has gone into your account, think again — that figure is only “hypothetical”.

The report highlights that one of the problems with tracking compliance is the disconnect between pay slips and the actual time employers have to pay the superannuation.

Employers are required to pay superannuation quarterly, while wages are typically paid weekly, fortnightly or monthly. Employers can currently satisfy their legal obligations by not paying super up to four months after the employee is entitled.

“Lost investment and accrual opportunities during this delay impacts retirement income,” the report says. “While a three month and 30 day grace period for payment may have been normal practice 25 years ago, in this day and age a four month delay in payment of SG entitlements is unacceptable.”

The report also warns that the problem is likely to be worse than its “conservative” estimates.

Currently, if an employee makes voluntary contributions to their super under a salary sacrifice agreement — in the belief they are increasing their super over and above the 9.5 per cent — a loophole allows the employer to count this towards their superannuation guarantee obligations.

While the majority of employers provide genuine salary sacrifice arrangements, some do not.

If the figure excluded salary sacrifice arrangements, Industry Super Australia estimates the total amount of unpaid super for 2013-14 would be $1 billion higher and affect a further 3 per cent of workers.

The report calls for a number of policy solutions, including requiring real-time payment and reporting of superannuation payments, closing the salary sacrifice loophole, increasing penalties for rogue employers, and boosting funding for the ATO.

frank.chung@news.com.au