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Australia’s $4bn Super blackhole impacting self-employed most

While a recent research report has predicted that the ATO’s crackdown on SG non-compliance will be effective in improving the payment of super to employees, the lack of super savings among the self-employed is expected to remain a critical issue.

 

 

As part of a recent research report, Mercer has estimated that around 935,350 of Australia’s workforce, including those that are self-employed, do not receive any kind of super, accounting for an annual $4 billion deficit in super savings.

Out of this total number, it estimated that around 400,000 Australian salaried workers have not been paid superannuation entitlements.

The estimates were based on a small sample file of tax and superannuation data from the ATO’s records for 2015–16.

The analysis was based on working Australians earning more than $8,000 per year who did not make any superannuation contributions or did not have contributions made on their behalf by an employer during the 2015–16 financial year.

The report estimated that around one in 11 workers are not paid super, while two in three self-employed do not receive any kind of superannuation payments.

It noted that the ATO has been playing a significant role in ensuring that workers are paid the minimum SG rate and has implemented a number of measures to improve compliance by employers.

“A new reporting mechanism for APRA-regulated funds, known as the Member Accounts Transaction Service (MATS), was recently introduced. Contributions for each member will be recorded and reported to the ATO at the time they occur rather than annually,” it said.

“The subsequent use of data analytics to, for example, match contributions with reported salary and PAYG tax will help improve their compliance activity.”

The ATO, it said, has also made changes to improve employees’ visibility regarding their entitlements and payments, through online services and myGov.

“All these are positive moves that will ensure better compliance of SG by employers,” the report stated.

While the ATO-led crackdown on recalcitrant employers will improve the plight of salaried workers, the self-employed remain vulnerable in terms of not receiving any super.

“The debate about legislating to force the self-employed into Australia’s superannuation system remains ongoing. Many self-employed individuals run small businesses and prioritise cash flow and re-investing into their business over saving,” it said.

“Many also believe their business will be their retirement nest egg, but that is certainly not guaranteed.”

Mercer suggested in the report that policymakers could look to the scheme used by Finland which requires self-employed workers to provide an annual wage earnings estimate, upon which pension contribution calculations are made, rather than the value of their business.

“Adopting a similar model to bring the self-employed inside the regulatory environment will provide a retirement safety net and ensure they exit the workforce with savings,” it said.

“This could be achieved by extending the SG payment to cover the self-employed, at a reduced rate initially, such as 3 per cent, to avoid a sudden and a hefty impost.”

 

Miranda Brownlee
12 April 2019
smsfadviser.com

 


Sam El Shammaa

Sam El Shammaa

Director/Financial Planner

For more than 20 years, Sam has been a financial planner helping individuals and families achieve their financial planning goals, by providing advice on Investment Planning; Insurance Planning; Tax Planning; Retirement Planning; and Estate Planning. Working with a network of highly skilled professionals in Sydney he is dedicated to providing high-quality advice and integrated wealth management solutions that simplify and enhance the quality of his clients' lives.

Sam established his own firm in 1997 and has overseen its steady development and growth. Attention to detail, good listening skills and great empathy are symbols of his appreciation by his clients. He has built long-term relationships with his growing client base and aims to provide excellent customer service.

Sam began his financial planning career in 1993 after completing a Bachelor of Science degree in 1991. Since this time he has accumulated many professional qualifications such as:

Sam has volunteered with the Cancer Council of NSW and can be seen almost every year volunteering or participating in the 7 bridges walk.

Away from the business, he enjoys spending weekends with his son. He is also a football (soccer) tragic and is a massive Chelsea FC fan.



George Pereira

George Pereira

Financial Planner

Having worked for national financial planning companies in the past, George has extensive experience in the provision of advice in risk insurance, investments and retirement planning and is focused on forming long-term relationships with his clients.

George has been awarded a Masters of Commerce (Financial Planning) and a Bachelor of Commerce through University of Western Sydney as well as having the Diploma of Financial Services (Financial Planning).


Jane Lim

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Financial Planner

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Jane entered the financial services industry in 2006, and worked with big blue-chip financial companies such as Count Financial Limited and AMP Financial Planning Pty Ltd.

She holds a Master's degree in Applied Finance through Macquarie University, and she is a member of the Million Dollar Round Table.

Being a self-confessed "tennis nut", Jane spends many weeknights in the tennis court, and is a frequent member of Sydney's Eastern Suburbs Tennis Competition.

Being a highly motivated professional, Jane is always eager to help her clients on a wide range of financial planning needs.

Paul Jayashekar

Paul Jayashekar

Financial Planner

Paul has been a financial planner for over 15 years helping individuals and families successfully achieve their financial planning goals. He is very focused on building successful long-term harmonious relationships with his clients.

He provides a holistic approach on various aspects of financial advice encompassing areas such as Investment Planning; Insurance Planning; Tax Planning; Retirement Planning and has extensive experience and knowledge in these fields.

Paul's professional qualifications are:

Away from his professional life, he enjoys spending his time with his family doing various activities such as coaching his son and taking him to games. He is a very avid sports fan and a cricket enthusiast.

Christian Tanadinata

Christian Tanadinata

Client Services Manager

Christian joined Capitalwise as Client Services Manager, with backgrounds in both customer service and administration.

Christian is passionate in providing excellent customer service by being attentive to client’s need as well as being able to circumnavigate challenges.

He holds a Master's degree in Commerce specialising in Marketing through the University of New South Wales.

Volunteering is one of his delights in life, where he had spent time being involved with the Centre for Volunteering, St Vincent de Paul's Society, and Sculpture by the Sea in a variety of positions.

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Jenny Zhou

Administration Assistant

Jenny is a University of New South Wales graduate who joined the team as an Administration Assistant. She is keen to put her customer service and organisational skills to use, making sure day to day operations run as smoothly as possible.

Outside of work, Jenny focuses her efforts on karate and ice hockey. She can often be found coaching and practicing karate at her alma mater. The rest of her time is spent at one of Sydney’s many ice rinks playing, practicing, or officiating ice hockey.

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