Work­ers miss out on $125m

Money Magazine Australia - - IN BRIEF - Martin Fahy, CEO, ASFA

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.

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