Super not a discretionary expense

“Superannuation is a must and has to be a priority for business owners.”

THERE was plenty of talk about superannuation during the federal election campaign and now, after plenty of debate about the Government’s proposed changes, the market is trying to work its way through where the legislation will land and many Australian workers and would-be retirees are rethinking how they now need to tackle their superannuation future.

And if you run a small or medium-sized enterprise (SME) you might have more to think about than most.

A report recently released by MYOB has found one third of SMEs are not contributing to their own superannuation, despite believing they will need $1 million to finally put their feet up.

The latest SME Snapshot from cloud accounting provider MYOB found even though SMEs recognised the need to be close to that magic million dollar mark, more than half simply will not have saved enough money.

MYOB chief executive Tim Reed says it is surprising to see superannuation is not top of mind for small business even though they regularly contribute to their employees’ super.

“MYOB research highlights a huge gap between what business operators know they should be doing, and what they are actually doing. We need to support our SMEs in retirement planning and emphasise the importance of regularly contributing to their own super,” Mr Reed says.

If business owners in their 60s are well short of the mark when it comes to how much they have tucked away in super, at least they have an idea of how much they would “like” to have to keep them comfortably independent into their dotage.

But according to the MYOB report, business owners under 50 are not focused on the financial challenges of superannuation, because more than half have no retirement plans.

Of those who are selfemployed, the statistics are even more concerning.

Recent research by the Association of Superannuation Funds of Australia revealed almost one quarter of selfemployed people do not have any superannuation and only 27 per cent of this group aged in their 60s had more than $100,000 in superannuation.

Many small business owners mistakenly believe their business will provide their retirement nest egg when they decide to sell the business and move on. But the truth is very often if you take the person who has been passionately driven to create and drive a business out of that business, there is not necessarily a lot left to sell.

And the reality of an independent business valuation has left many would-be sellers despondent at how dispassionate eyes view the reality of their commercial enterprises.

So love it or loathe it, superannuation is a must and has to be a priority for business owners and operators in the same way they are legally obligated to look after their employees.

Mr Reed says previous research has shown what many business operators know only too well — that cash-flow concerns are consistently a top “pain point” for SMEs and investing in super can be one of the things that gets pushed to the bottom of the pile.

“SMEs are often forced to wait months for payment, resulting in cash-flow problems,” he says.

“This lack of cash can then impact the owner’s ability to pay their own super, as well as other pressing payments, such as wages and rent.”

But all small business owners need to remember — and be reminded — investment in your superannuation cannot be looked at as some form of discretionary spending.

After all, whose hands would you prefer to put the certainty of your retirement future in . . . yours or the Governments?