Super conundrums for casual retail workersIf you’re a casual retail worker, or even a fully signed up member of the gig economy listen up. Enjoying all the flexibility and freedom that comes with choosing how and when you work does have some potential downsides in terms impacting your retirement savings.
Working short shifts with many employers can mean some of your gigs put you below qualifying for the superannuation guarantee (SG). That’s because if you earn less than $450 a month from an employer, you don’t qualify for the superannuation guarantee (SG). And this means you’re missing out big time on superannuation savings.
Under the Superannuation Guarantee, employers must contribute 9.5% of your wage into a superannuation fund if you are aged over 18 and earning at least $450 (gross) a month, regardless of whether you are employed full-time, part-time or casual.
In today’s gig economy, it is not uncommon for casual retail workers, or childcare or aged care workers for that matter to hold down two or three jobs with different employers. Yet, because of the $450 a month threshold, you are missing out on being paid super.
Casual retail workers missing out
In fact, according to the Association of Superannuation Funds of Australia (ASFA), the $450 a month threshold means around 220,000 women and 145,000 men aren’t qualifying for as much as $125 million in super contributions a year.
It’s a big problem, and something that the superannuation industry needs to address by recognising the realities of the gig economy and removing this $450 threshold. For the time being though, you can’t do anything about this particular loophole other than taking on more shifts to get you beyond the $450 threshold when the super guarantee kicks in.
Maximise your super potential
However, where you are earning more than $450 per month, you are entitled to super contributions from your employer whether you work as a full-time, part-time, or a casual employee. So, you need to take the time now to make sure you’re maximising the earning potential of your super.
It doesn’t matter if you’re a casual retail worker or full-time employee, or wherever you happen to be in your working life, it’s critical to ensure you manage your super well. This means you are sure you:
- Are being paid your superannuation entitlements in full,
- Have just one super fund, and
- Have chosen a suitably growth-focused investment option for the stage of your working life.
In reality though, if you’re like many other casual retail workers, you give scant attention to something that is such an important part of your future. When you enter the workforce, the prospect of retiring could not be further from your mind. So, you don’t give super the focus it deserves, and end up in your employer’s default or MySuper account. When you move jobs, you simply chose your new employer’s default account, effectively doubling up your super funds, but not your super nest egg.
Having multiple super funds does not multiple your investment, it simply multiplies the fees and charges you pay. And this in turn eats away at your super investment.
Pay attention to your super
Getting all your super ducks in a row can take a bit of time and thinking. But it’s the sort of thinking that has the potential to be worth tens of thousands of dollars to you in the long run when you retire. As we discussed in a previous post, you need to start by:
- Searching for lost super
- Consolidating your super
- Picking the right fund to grow your super
So, don’t miss out on your super earning capacity. With the power of time combined with compound interest your super has the potential to grow considerably. And the younger you are, the more you stand to win by sorting your super sooner rather than later.
