$10 billion super shortfall compromises retirement for millions

A $10 billion shortfall in super savings is expanding, according to new research.

Industry funds warn of super risk

The current $10 billion superannuation shortfall of missed savings could more than double by 2027 if regulatory arrangements are not changed, industry funds have cautioned.

New research commissioned by industry fund AustralianSuper and construction industry fund Cbus Super has found that 2.3 million Australian workers are not being adequately covered by superannuation, amounting to a shortfall of $10 billion in missed super contributions every year.

According to the research, these figures will rise, with 3.1 million Australians – or one in five workers – to miss out on $23 billion worth of superannuation payments by 2027.

The gig economy and 'non-traditional ways of working' are changing the employment landscape, and technology has made it easier to segment work into smaller parcels that often fall outside the scope of superannuation.

Women are especially penalised by the current model, being more likely to participate in part-time or casual work, which increasingly comes in the form of a contractor rather than employee relationship.

Women – particularly those in part-time work – are also overwhelmingly affected by the outdated provision that restricts superannuation payments to individual jobs that earn more than $450 per month.

AustralianSuper Group Executive Membership Rose Kerlin said the changing nature of work means the $450 threshold for payments is penalising more and more workers.

“The abolition of the $450 threshold and the increase in the Super Guarantee to 12 per cent as soon as possible are the key reforms needed to ensure the superannuation system keeps pace with the changing nature of work in the economy and ensures members can achieve the best possible retirement,” Ms Kerlin said.

“AustralianSuper believes that without meaningful reforms the superannuation system will be leaving vulnerable workers behind when it comes to retirement. The abolition of the $450 threshold could help up to one million Australian workers with second jobs or low-income employees boost their superannuation savings.”

Cbus Chief Executive Officer David Atkin said that in the construction industry – for which Cbus is the leading industry superannuation fund – transient contract work, casualisation and self-employment are not new, but are increasing and impacting people's retirement savings.

“Not surprisingly, the construction industry features prominently in the research around those not receiving compulsory super contributions, with an estimated gap of nearly $2 billion a year impacting the retirement savings of nearly 350,000 people,” Mr Atkin said.

“After 25 years of compulsory superannuation in Australia, it is clear there is a large and growing number of Australian's not sufficiently saving for their retirement.

“It's time for industry, regulators, policy-makers, employers and unions to come together to discuss solutions.”

The research by NMG Consulting points to a design fault in the scope of the current superannuation guarantee legislation and its predication on traditional, full-time, continuous employment. It also concludes that the exemption for the self-employed, based on the assumption that they will accumulate assets in their business to fund their retirement, has not been validated by experience.

What do you think? Should the $450 threshold for superannuation payments be scrapped? Has your retirement income been adversely affected because of the amount of part-time work you undertook?

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    COMMENTS

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    Not a Bludger
    23rd May 2018
    11:33am
    Here we go again - rent seeking industry super funds (and their union thug bosses/ directors) trying to get even more of somebody elses’ money under their claw.
    Independent analysis and advice? - absolute rubbish.
    johnp
    23rd May 2018
    1:18pm
    Maybe your partly right but its still the industry super funds that give best growth to members and not tainted by the likes of AMP, banks etc etc
    MICK
    23rd May 2018
    1:48pm
    You just cannot accept that Industry Funds make much larger profits FOR THEIR MEMBERS than Retail Funds.
    I asked you yesterday to put up the top 3 funds in both sectors and you did not. Now you repeat the same false accusations. You are sounding like an echo from the current government.
    Put up or shut up Bludger!
    Hasbeen
    23rd May 2018
    2:13pm
    I do get very sick of these propaganda articles from super funds, industry or retail, touting to rip more off the poor fool worker.

    One has to wonder what is in it for publishers of these things.

    23rd May 2018
    12:01pm
    No my super has not been affected by working part time. Being a male, a husband and a father I had to work full time my entire life.
    Anonymous
    23rd May 2018
    12:51pm
    I have great super, my wife is out shopping with it now.

    23rd May 2018
    12:29pm
    I've had a gutful of this so-called equality for which women are striving. It's not good enough to have equal pay and equal conditions under most, if not all, awards agreed to by employees, unions, government and employers. No, now the women want more. They want to have time off to have children, be paid for it and have an employer also pay super funds. If an employer won't pay for the super that has not been earned then the "government" should be made to pay for it.

    Enough is enough! Why should one section of the community be treated any different to another. Pay is based on an award which allows for full-time, part-time and overtime. If any section of the community chooses to work part-time then their pay and super should reflect that choice. To those who want us to believe that women are disadvantaged because they are women, please provide the proof. Could it be that some women choose to work pert-time because it suits their lifestyle? Am I allowed to suggest such a proposition?
    MICK
    23rd May 2018
    1:51pm
    Yeah, spot on.
    Saw it last night in mining where the call was for "more women" which was a snide way of saying 'equal numbers'. I'd like to see equal numbers in medical research where women soak up much of the budget with breast cancer and don't give a hoot about men whose mortality rate from prostate cancer is the same as women with breast cancer. Where is the women's lobby on this one?
    Equality? More like bloody minded abuse. The pendulum swinging!
    Anonymous
    23rd May 2018
    2:00pm
    There will never be equality MICK. 99% of bricklayers are men, 78% of nurses are women and the list goes on. To have true equality there should be 50/50 and that is impossible. I have always believed that the best person for the job is the one with the most experience and the best qualifications, be it man or woman. Makes me a dinosaur in today's world.
    KSS
    23rd May 2018
    12:41pm
    So if a worker is paid the absolute minimum wage of $18.29 per hour ($22.86 if classified as a 'casual' worker) They only have to work 24.6 hours in a month to reach the minimum superannuation criteria. A casual worker would only need to work 19.68 hours in a single month.

    So even someone working just one full day a week on the minimum hourly rate would reach the superannuation threshold before the end of the month.

    "“Not surprisingly, the construction industry features prominently in the research around those not receiving compulsory super contributions, with an estimated gap of nearly $2 billion a year impacting the retirement savings of nearly 350,000 people,” Mr Atkin said."

    Seems to me the fault here is with the employer not paying the contribution and not that the employee doesn't reach the threshold.
    MICK
    23rd May 2018
    1:54pm
    And the government turning a blind eye and on top of that bringing in workers as it claims that business cannot find Australian workers.
    I think this might be a bit more complicated than your model KSS.
    Anonymous
    23rd May 2018
    3:54pm
    Bit harsh MICK. You always blame the "government" when the majority of the problems are those made by bureaucrats who are not doing the job that they are paid to do. Sure, governments legislate but MP's don't do the enforcement, they trust others to do that. If a politician is told there is a problem and doesn't act then the blame goes back up the chain of command to them but if they are unaware I can't see how they should carry the can.
    Linda
    23rd May 2018
    1:02pm
    Am thinking this through, and note, I am a female. What may be concerning some is the big bill for old age pensions if anyone in the work force can't amass the fortune needed for old age via superannuation. The stay at home spouse these days is quite rare, unless they are unemployed. They have no superannuation, be they man or woman. Biology says, women if they have children will most likely have employment breaks, and traditionally they also get less pay. Looking forward, who is going to fund the old age pension for this patch of society? With high costs of living and low wages, there is less available to save. If I am left on my own then my income will plunge. I have no idea if it will still be enough to pay the bills for our modest lifestyle. No holidays, no dinners out, not many special purchases, just house maintenance, bills, food, insurance, rates, car expenses and the like. Every time they change the rules around retirement and arrangements I shutter because it all becomes even more uncertain. Life is uncertain, yes, but we like to be able to plan well enough to reduce the burden on society and be responsible citizens. Personally, I think global warming and high prices for homes and the government being sneaky is the biggest part of our worries, collectively.
    MICK
    23rd May 2018
    1:54pm
    So you are single?
    Anonymous
    23rd May 2018
    4:00pm
    Thank you Linda but I take issue with your comment, "traditionally they also get less pay". What you actually should have said is that "they work less hours and their pay reflects that". It's well past the time where women stop playing the victim in all of this.
    maelcolium
    23rd May 2018
    1:14pm
    Bullshit!

    Listen carefully. compulsory superannuation was designed to supplement, not replace the age pension. Read Hansard and the truth will reveal itself.

    Also, the compulsory contributions was a deal for workers to forgo wage increases so that a retirement nest egg could be created. Everyone sacrifices present consumption for future benefit.

    This was the deal that was struck people. We should stick to it and demand successive Government obey the agreement. It's out money, not theirs. No wonder they didn't want it inserted into the Constitution.

    BY political shenanigans, It is morphing into another retirement scheme to be tucked away into general revenue never to be seen again. Why trust Governments?
    MICK
    23rd May 2018
    2:01pm
    There are two things which super did.
    The first is it allowed rich income earners to tuck away a hug pile of money whilst avoiding paying the correct rate of income tax. The feeding frenzy was allowed to go on for decades. Just like the Bottom of the Harbour fraudulent scheme was also allowed to run for many years. Same as the fraudulent Offshore Tax Havens are now being allowed to run and the loopholes NOT closed.
    The second is it forced people into compulsory saving for retirement and at the same time the government keeps cutting back on pension entitlements by putting hurdle after hurdle there to prevent retirees from accessing their right to a pension.

    Last thing to consider is what you said maelcolium, they want to get at the superannuation savings of Australians and will eventually roll this into consolidated revenue....and then go on an almighty wasteful spending spree the likes of which none of us has ever seen.
    Trust governments? They are the enemy and the current one is the devil in a suit.

    23rd May 2018
    1:52pm
    Industry superfunds promoting their self interest again
    Agree with Not a Bludger
    Union ploy to scam more off employees and taxpayers
    MICK
    23rd May 2018
    2:03pm
    Put up or shut up.
    List the TOP 3 industry and then retail funds and compare returns. You won't. You can't. Because you are a troll spewing out government propaganda.
    I AGAIN ask you to prove your lies!!!!!!
    Anonymous
    23rd May 2018
    3:54pm
    Mick - why do you get so riled up and abusive when anyone exposes the unions interest in super funds and how they enrich themselves from it.
    Now they want more money sucked into the funds to be used and abused by union fat cats
    If labor comes into power Shorten will do whatever his union masters command
    Not a Bludger
    23rd May 2018
    2:35pm
    Mick - You are so-oo boring.
    It is not a matter of which fund is a decimal point or two up or down on another.
    It is entirely a matter of who controls these very large sums of money - and for industry funds it is union thug bosses who also pay themselves handsome directors fees.
    Talk about conflict of interest let alone trust.
    Trust and union boss are impossible to put in the same sentence.
    And, Mick - do you really have to respond to every post - surely you must have some work to do do in that union/pollie’s office of yours.
    ozrog
    23rd May 2018
    4:31pm
    The biggest threat to superannuation is companies not meeting their obligation to pay into employees super then going into bankruptcy. Liquidators freezing super and employees losing years of super.
    Florgan
    23rd May 2018
    8:10pm
    Definitely abolish the $450 threshold
    Every cent you earn should have 10% super paid on it ,
    no more,
    the country can’t afford it.
    Penalties need to increase for employers who don’t pay super to their employees every 1/4.