Can the super system function in an economy where an employer-employee structure is no longer the norm? It’s a question consultants and challenger funds are asking.
The Financial Services Council (FSC) has argued that the government needs to prepare for disruption to superannuation, tax revenue and retirement outcomes as the gig economy grows and the nature of employment changes.
In a submission to Treasury, the FSC said the emergence of the gig economy could lead to more self-employed workers, or potentially “substantial increases in unemployment.”
“Either of these possibilities will have dramatic impacts on the superannuation industry and retirement incomes.
“For example, there is a requirement for employees to put aside funds for retirement through the superannuation guarantee, and no such requirement applies to the self-employed. As a result, the super balances of the self-employed is substantially lower near retirement.”
Calling on the government to launch an inquiry into the impact of the gig economy on the labour market, the FSC said: “It is better to be prepared rather than react in haste right in the middle of a major change.”
To Peter Stanhope, co-founder of gigSuper, the gig economy itself is nearly over. “[The gig economy] is actually just the economy when you look at the way work is changing,” he said.
gigSuper targets self-employed workers or workers in the gig economy and is set to launch mid-2018. Mr Stanhope said gigSuper came about after he and co-founder Martin Batur left the corporate world to discover there was no super fund specifically built for the self-employed.
“When you dig into stats you see that there's a real problem here,” he told Nest Egg.
“You see that there's 1.7 million self-employed people in Australia and 75 per cent of them are not currently contributing to super. So that's a significant problem, not just for the individuals themselves who are missing out on the tax break from super, but also longer term for the Australian economy as a whole.”
He explained that the “final piece of the puzzle” in the decision to build gigSuper was the issue of under-contributing self-employed Australians was only going to grow, leaving a “whole group” of Australians reliant on the age pension.
gigSuper is a super fund that allows members to automate their voluntary contributions, while a supplementary non-super redraw account allows members to withdraw funds from their account in times where business is slow.
Mr Stanhope anticipates that gigSuper won’t be the only fund targeting the self-employed for long as the gig economy grows in prominence.
“You'd be naive to think that other super funds are not going to try and build a product for the gig economy.
“There's articles on it on an almost daily basis now about the changing nature of work, ASFA has produced a lot of papers and even some recommendations about the gig economy going forward and in time I think what we'll see is legislation will change to support gig economy workers making super contributions.”
As it stands, however, Mr Stanhope believes the labour market is in an “uncertain environment”.
“[But] we're small and we're nimble so I'd argue that we're better placed to be able to adapt to that changing environment.”
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