For seven years, the 36-year-old worked as a bicycle mechanic in a Sydney bike shop and was not paid super.

"Every time it was brought up it was met by anger from the shop owner," Alan says. He did not report it to the Tax Office because he was scared of losing his job.

Now, two years later, he has still not received his super and has given up, as the company has gone bust.

It's a common problem. Workers are being ripped off to the tune of $2.6 billion a year in compulsory superannuation payments, according to a report for industry super fund Cbus. It affects almost 700,000 employees at any given time, or 7 per cent of the workforce.

Yet the Turnbull government has legislation before parliament that drastically reduces the financial penalties for employers caught not paying super. It's been framed as a "red tape" issue.

David Atkin, the chief executive of Cbus, which covers workers in the construction and building industries, says non-payment of workers' rightful superannuation is damaging for employees.

"Lost retirement saving today has a compounding effect, magnifying the losses over time," Atkin says.

He believes the penalties for employers not paying their employees' superannuation should be toughened not reduced.

Trouble areas for super 

The report by Tria Investment Partners for Cbus suggests the worst affected industry of all is construction, followed by property services, mining, hospitality and manufacturing.

The main reason for super not being paid is simply employer non-compliance, which includes businesses with cash flow problems. Other reasons employers do not pay super include businesses operating in the cash economy, sham contracting and employer insolvency.

Employers are required to make super payments at least once every three months. David Haynes, executive manager of policy and research at the Australian Institute of Superannuation Trustees, says notifications on payslips should really be regarded by employees as "IOUs" rather than as actual payments.

Employers have to report superannuation payments to the Tax Office, which has responsibility for enforcement action over the payment of super.

Not surprisingly, many employees, like Swinton, are reluctant to bring in the Tax Office to investigate their employer,

"It's bad practice to have an enforcement regime that relies only on whistleblowers, that is, which relies on employees to contact the authorities," Haynes says.He says the Tax Office needs enhanced data matching capabilities to "hunt down the rogue employers".

Brad Monaghan, 43, worked for a publishing company for about two years where he was not paid super – worth more than $20,000.

Monaghan suspects the company was experiencing cash-flow problems and that was the reason it was not paying super to its employees, despite the super payments being included in his payslips.

He and other employees asked the employer repeatedly about their super and were told that it would be sorted out by next pay. "They just keep putting us off," Brad says.

Brad contacted the Tax Office, which has responsibility for enforcement of super payment obligations. The Tax Office did follow up with Brad's employer.

"It was risky for me to blow the whistle, but my principles were more amplified in the mix than my fear of losing income," he says.

However, Brad left the company three years ago and, shortly after, it went bust.

It wanted to re-invent itself as a new company but received legal advice that it had first to pay former employees their super. Eventually, Brad received his super.

Even when an employee does report a company for non-payment, the Tax Office can take a long time to investigate and it has little power to enforce payment if the company goes into liquidation in the meantime.

The best way for employees to protect their retirement savings is to understand their entitlements and be proactive about following it up.

Haynes says employees should first check with their super fund to make sure their super has been paid.

Super funds will often chase up arrears with employers. For example, Cbus has recovered more than $400 million in super entitlements for its members over the past decade.

The reality is that industry super funds, which often cover almost all of the employees at a particular workplace, are more likely to chase arrears than a fund that covers perhaps only a single employee at a workplace.

Dan Warne, who has worked in telecommunications and media in both Sydney and Melbourne, found his industry super fund quite helpful when he was chasing unpaid super, but believes the Tax Office was more interested in systemic avoidance than one-off situations like his.

A former employer had paid all entitlements right up until the point that Warne handed in his resignation but failed to lodge several thousand dollars of both superannuation and tax for his final pay packet. It took six months of nagging before Warne got his super and the Tax Office got the tax instalment.

"You have to be persistent and prepared to stop being polite about it at some point because some people are very good at ignoring things when it comes to money," Warne says.

Twitter: @jcollett_money @niltiac

Are you eligible for super?

Most employers have to pay superannuation of 9.5 per cent to all employees earning more than $450 in a calendar month. Whether an employee is part-time or casual is irrelevant.

Those aged under 18 have to work at least 30 hours a week before they are entitled to superannuation.

There is a growing trend for employers to try to hire contractors rather than employees, which avoids the payment of superannuation, provision of annual leave and other benefits.

The Tax Office regards some of this as "sham contracting". Legally, a contractor is independent of the business and is providing a service, rather than being directed by the employer what to do.

Additional reporting: Caitlin Fitzsimmons