Vita Palestrant

Re­tire­ment is a long way off for young work­ers but that’s no rea­son to ne­glect su­per

Money Magazine Australia - - CONTENTS -

Many ca­sual en­try-level jobs are now un­der­taken by young­sters still study­ing at school or univer­sity. The ben­e­fits are ob­vi­ous: it fos­ters a strong work ethic and gives them their first lessons in fi­nan­cial lit­er­acy.

While su­per might be the last thing on their minds, learn­ing the ropes early is some­thing they are likely to be grate­ful for when they are older. Thanks to the power of com­pound­ing, in­vest­ing at an early age beats any des­per­ate at­tempts to make up for lost time later in life.

Dean Bornor, head of mem­ber advice and ed­u­ca­tion at REST, a large in­dus­try fund with many young re­tail work­ers, says it puts a lot of ef­fort into en­cour­ag­ing young work­ers to take their su­per se­ri­ously. “Be­cause they have small bal­ances they might think it’s not im­por­tant but over the course of the next 35 years it’s go­ing to be­come tremen­dously valu­able – it’s what we try and ed­u­cate our younger mem­bers on.”

The first step is to de­ter­mine whether you are en­ti­tled to the su­per­an­nu­a­tion guar­an­tee (SG). Cer­tain rules ap­ply, and it doesn’t mat­ter whether you work ca­sual, part-time or full-time hours.

Those 18 and older must earn at least $450 a month be­fore tax to be el­i­gi­ble for su­per’s 9.5% of wages. Those un­der 18 are re­quired to work at least 30 hours each week and be paid at least $450 in a full cal­en­dar month.

“There are cer­tain rules the tax of­fice stip­u­lates, as far as when an em­ployer needs to pay you the SG,” says Bornor. “If you are pay­ing an em­ployee over 18 $450 or more in a cal­en­dar month, then the SG is payable. If an em­ployee earns less than that in a month, there’s no obli­ga­tion on the em­ployer’s part to pay the SG. If you are un­der 18, then there is a 30-hour a week rule. If you are work­ing less than 30 hours a week, there is no re­quire­ment to pay the SG.

If you are en­ti­tled to the SG, the next step is to find out where your con­tri­bu­tions are go­ing. If you haven’t cho­sen a su­per fund (and filled in a form) your em­ployer will do it for you, with the money paid into a de­fault in­vest­ment op­tion called MySu­per.

“Most em­ploy­ees go with the de­fault fund but of­ten don’t know which fund it is so they need to check that with their em­ployer,” says Bornor. “They should also re­ceive some­thing from their su­per fund ac­knowl­edg­ing their mem­ber­ship. It’s im­por­tant for them to reg­is­ter online be­cause that means they can keep track of their con­tri­bu­tions.”

By law em­ploy­ers are re­quired, as a min­i­mum, to make quar­terly SG con­tri­bu­tions but this can make track­ing pay­ments dif­fi­cult. In­dus­try Su­per Australia (ISA), the um­brella body for in­dus­try funds, es­ti­mates 2.98 mil­lion work­ers were short-changed by al­most $2000 each in 2015-16. Most of those un­der­paid were ca­sual and part-time work­ers.

There is leg­is­la­tion be­fore par­lia­ment to bet­ter en­force SG pay­ments. How­ever, ISA says the re­form doesn’t go far enough and it would like to see the fre­quency of SG pay­ments shifted from quar­terly to monthly or fort­nightly to bet­ter align with wages.

So what should you do if you think you’ve been ripped off? Raise it with your em­ployer. If that gets you nowhere and you are a mem­ber of an in­dus­try fund, ask for help. Many have an ar­rears process that pur­sues un­paid su­per.

Check with your fund if they have an app that can alert you to when con­tri­bu­tions have gone in. Aus­tralian Su­per and Rest are just two funds that of­fer this. “Where we have been un­able to re­solve a case of non-pay­ment, we will re­quest our credit man­ager to en­gage with the em­ployer,” says Bornor. Of­ten it’s an ad­min is­sue. Missed pay­ments are quickly re­cov­ered.

The tax of­fice can also help.

Vita Palestrant was edi­tor of the Money sec­tion of The Syd­ney Morn­ing Her­ald and The Age. She has worked on ma­jor news­pa­pers overseas.

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