In the 22 years since its inception, Industry Funds Credit Control (IFCC) has secured more than $1 billion of unpaid superannuation guarantee (SG) contributions from employers.

David Gibson, general manager of IFCC, says that between July 1, 2007 and June 30, 2011, the IFCC secured about $400 million of missed SG payments; in the 2011-12 financial year, it was $111 million; and this financial year it is likely to be slightly higher than that.

IFCC swings into action after a member of a superannuation fund has alerted the fund that an employer has missed one or more of its required SG payments. In the first instance, the fund will contact the employer, but if that approach is unsuccessful the matter is handed over to IFCC.

Gibson says that in its early days – when IFCC acted principally for Cbus – the reason for non-payment of SG contributions was usually just a refusal or reluctance on the part of employers. Today, he says, more employers are having genuine difficulty making their prescribed payments.

The main reason is cashflow, Gibson says. The debtor employers that IFCC most commonly comes onto contact with have fewer than five employees.

“It’s cash flow, cash flow, cash flow,” Gibson says.

“They’re little guys, and they may have done some work for bigger guys, who are having trouble getting paid themselves.”

Member-centric service

Gibson says that when IFCC was set up, it somewhat optimistically – perhaps naively – believed it could quickly encourage all of the employers that Cbus dealt with to get their SG payments up to date “and then it would all run smoothly”.

More than two decades later, IFCC is dealing with an average of 80,000 unpaid SG contributions every month – up from about 30,000 a month in 2007-08.

It now acts on behalf of members of Cbus, AustralianSuper, REST, CareSuper, AMIST, Club Plus and HIP Super, as well as the redundancy fund Incolink.

Bill Danaher, chief executive of IFCC parent company Industry Fund Services (IFS), says the company has “developed rigorous processes in identifying SG payments that fall into arrears, investigating the situation and rectifying it very quickly”.

“Importantly they always endeavour to maintain good relationships with employers while resolving sometimes difficult situations,” he says.

“IFCC undertakes a great member-centric service.”

 Responsibility for compliance

In response to a query from Investment Magazine, the Association of Superannuation Funds of Australia (ASFA) said that there is currently “no requirement for a trustee to chase employers for money”.

“However, some participating-employer agreements require the employer to pay more frequently than the quarterly SG requirement,” it said. “These funds will chase recalcitrant employers.”

It is the job of the Australian Taxation Office to ensure that employers comply with the SG legislation, according to ASFA, and the Australian Prudential Regulation Authority has “responsibility for compliance with the requirement of an employer to forward personal contributions deducted from an employee’s post-tax pay with 28 days of the end of the month in which the money was deducted”.

ASFA said it was not aware of any likely changes to theses responsibilities, specifically a suggestion that greater responsibility may be placed on trustees to ensure that members’ SG contributions are made by employers in an accurate and timely fashion.

“The difficulty with changing the fund’s obligations is that funds do not have sight as to whether or not an employer has an obligation to make contributions with respect to a particular employee, as they are not a party to the employment contract,” ASFA said.

One comment on “Policing super payments”
  1. IFCC Question: If my employer has made a catch-up arrangement or Promise-to-Pay with IFCC, where does my employer stand in the eyes of the ATO with SG Charge? Do I still stand to receive the missing SG from the employer, plus the SG Charge interest?

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