Workers miss out on $125m
There is currently a $450-a-month wage threshold for the superannuation guarantee (SG) and as a result an estimated 220,000 women and 145,000 men miss out on around $125 million of contributions each year.
The SG is 9.5% of an individual’s salary which, by law, their employer has to pay into their super fund.
It should be part of everyone’s work-related entitlements, particularly low-income earners, who need SG to help put them on the road to comfort in retirement.
The $450 threshold particularly affects women, who often work in casual or part-time jobs for more than one employer at a time.
It also impacts young people in casual jobs and delays them embarking on the super journey.
Having young people engaged in super, saving as early as possible, makes more sense than excluding them from a super start in their first job.
Compounding of investment returns can turn small initial contributions into substantial amounts at retirement.
Casual and low-paid workers in retail, hospitality and nursing are reportedly the hardest hit by being left out of super due to the threshold.
For a student aged 19 years, working part time for five years and earning $4000 a year, a $1900 super guarantee would apply. For a woman aged 37, working part time and earning $5000 a year, a $1425 SG would apply. These are significant amounts.
As more and more people build portfolio careers around the gig economy, we need to move with the times and recalibrate the SG to meet their needs.
Everyone needs super. It’s time to level the field, give everyone the entitlement of super and strengthen the super system by removing any impediment to providing a fully universal means to build wealth.