Is the superannuation guarantee a barrier for women, low-income earners and those with multiple jobs?

The Australian superannuation system is designed to be universal.

Employers do not have to pay the 9.5 per cent superannuation guarantee to people who earn less than A$450 a month from one employer. Critics say this disadvantages low-income workers or people who work multiple jobs with different employers. Should the threshold be raised, or dropped altogether?

Complied by Nina Hendy

Sandra Buckley

Executive offcer, Women in Super 

Sandra BuckleyYes, it should be dropped immediately and not increased, as it results in many Australians – predominately women – missing out on valuable super payments [because] as many as one in five women (18 per cent) currently have a job that pays less than A$450 a month. 

This is nearly twice the number of men affected by the threshold limit, with the highest proportion of women affected between 18 and 35 years old. Many women earn more than A$450 per month, but from multiple employers, so they do not meet the A$450 criteria.

Modern payroll systems now make it easier for employers to meet their super obligations.

“One in three women are retiring into poverty.” Sandra Buckley

The increasing casualisation of the workforce and increased number of women (and men) working flexibly and part-time ensures that the A$450 threshold will continue to impact their ability to save for a dignified retirement. 

Women retire on average with less than half the super of men. One in three women are currently retiring with no super. One in three women are retiring into poverty. Women aged 50 and over are the fastest growing group of homeless. 

These are sobering statistics and structural changes to the current super system are necessary to reverse the figures or we will condemn future generations of women to the same outcome.

The age pension is available for those who have no superannuation, but all Australians have the right to a dignified retirement and universal superannuation should be just that – available to all. 

Eva Scheerlinck

Chief executive, Australian Institute of Superannuation Trustees 

Eva ScheerlinckIn a modern retirement incomes system where advances to payroll systems have made it very easy for employers to meet their superannuation obligations, there is no justification for any worker missing out on super. 

Our super system is designed to be universal, benefiting all workers in all industries. The A$450 monthly income threshold for compulsory super payments locks out many low-paid workers who work for multiple employers. It has been estimated that as many as 350,000 workers are in this category, with more than half being women. 

The increasing casualisation of the workforce and the rise of the gig economy make removal of the A$450 limit even more important.

“There is no justification for any worker missing out on super.” Eva Scheerlinck

The Australian Institute of Superannuation Trustees (AIST) will continue to advocate for the removal of this barrier, as well as other important policy measures that benefit low-income workers and women, who currently retire with about half the super savings of men. 

Professional Development: Switching of superannuation funds: switching superannuation funds is important for the consolidation of a person’s superannuation benefits. It is, however, essential for an adviser to be aware of any benefits their client may lose if they switch from one superannuation fund to another.

Sanchi Kariyawasam CPA 

Owner, A360 Accounting 

Sanchi Kariyawasam CPAI believe the superannuation threshold should be increased. As someone working with many small-to-medium employers and (in) specific sectors such as swimming and water safety, I see that there are many part time/casual and contract-basis employees who may just qualify for super in a given month earning, say, A$450 a month, but the employers then have to go through a tedious administration process to firstly identify who qualifies, calculate and then pay super for such employees. 

The hidden costs on employers of processing low value super payments are not worth the effort, as the ultimate benefit (to) employees would be immaterial too. I think such employees would prefer a better hourly rate. 

For example, within the swimming industry, some casual instructors may only work a few hours in a given month running one or two classes. Under the existing super threshold, they may just qualify. 

However, when speaking to various payroll departments, I always find a backlog of unpaid super due to lack of information provided by the swim teachers – one reason being that these casuals are reluctant to maintain a superannuation account to receive such an immaterial super payment, and some even say they don’t know why they get paid super for performing causal work every now and then. 

“The hidden costs on employers of processing low value super payments are not worth the effort.” Sanchi Kariyawasam

Overall, this results in an additional burden when employing casual, part-time or contract staff who only work a few hours a month with one employer. Reducing or removing the threshold would add to employers’ costs, hence impact their propensity to employ casual people. 

If anything, in my opinion, increasing the threshold to at least $1000 would reduce employers’ hidden costs and maybe lead to them employing more casual or part-time staff. 

The experts

Sandra Buckley 
Sandra Buckley is executive officer for Women in Super; a not-for-profit with a long history of advocating for better retirement outcomes for women. Buckley is responsible for collaborating with stakeholders including super funds, women’s organisations, federal and state governments, universities and unions to ensure that women are not forgotten in the superannuation debate. She previously spent 18 years in relationship management at many international banks covering the global pension fund market. Buckley holds a bachelor’s degree in international business studies and languages from Dublin City University and master’s degree in economics and law from Copenhagen Business School. 

Eva Scheerlinck 
The Australian Institute of Superannuation Trustees (AIST) appointed chief executive Eva Scheerlinck to the role in 2017, having since 2010 previously served as AIST executive manager, governance and stewardship. She has led the development of a new governance code for AIST profit-to-member funds and been pivotal in driving industry-wide initiatives to improve outcomes for Indigenous Australians as chair of the Indigenous Superannuation Working Group

Sanchi Kariyawasam CPA 
Sanchi Kariyawasam is the owner of A360 Accounting, which provides personalised business solutions to small-to-medium businesses and entrepreneurs. She is also a consultant at AUSTSWIM, Australia’s national organisation for swimming and water safety. She has studied accounting and finance at Monash University and has a passion for leadership and empowerment of women within workplaces and society. She is also a member of CPA Australia’s SME committee and has worked within the SME sector for over a decade. 

Read next: So you think you’re in good shape for retirement?

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August 2018
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