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Women – particularly those in part-time work – are also overwhelmingly affected by the outdated provision that restricts superannuation payments to individual jobs that earn more than $450 per month.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