18 percent of self-employed Australians have no superannuation, ASFA figures show

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A man works with a laptop at the airport in Hanoi, Vietnam October 18, 2017. Reuters/Kham

Self-employed Australians have super balances approximately half the size of other employees in the lead up to retirement, new figures show. Eighteen percent of self-employed Aussies have no superannuation, while eight percent of salaried and waged workers have nothing in superannuation.

This is according to the recently released Association of Superannuation Funds of Australia’s (ASFA) Superannuation balances of the self-employed report. The new figures suggest that self-employed Aussies are more than twice as likely to have zero super. The disparity is even greater for self-employed women compared to men who work in a similar setting.

Compared with $175,000 for salaried workers, the average self-employed female between 60 and 64 has a balance of $83,000. This is in comparison with an average balance of $143,000 for self- employed men between 60 and 64, compared with $283,000 for salaried male workers.

The ASFA noted that as the lack of superannuation is an issue for current self-employed workers, the magnitude of the problem will likely to increase as the gig economy is growing.

ASFA senior research adviser Andrew Craston said the issue of insufficient retirement savings among the self-employed will be increasingly important as the gig economy grows.

The number of gig economy workers in the country is likely to grow rapidly in the years to come as well.

Craston believes that a significant improvement in terms of distribution and scale is needed to support the self-employed in retirement. “However, leaving it to individuals to decide whether or not to save for retirement leads to less-than-optimal outcomes for both individuals and the community more generally,” Craston added, according to nestegg.com.au.

ASFA CEO Dr Martin Fahy acknowledged that 10 percent of the workforce is now in the self-employed sector. Most new workers in the gig economy are going to be self-employed contractors, but Fahy warned that many will end up with insufficient retirement income without a reform to provide for these workers.

Employers need to pay superannuation given that a worker gets at least $450 in wages in a calendar month. ASFA has restated its call for the superannuation guarantee (SG) to be extended to all forms of employment. It pointed out that blanket SG coverage for workers in the gig economy would perk up the competence of the nation’s retirement income system. Furthermore, ASFA affirmed it is working to develop proposals that will formally include the self-employed in the SG regime.