Published 28 Mar 2018
The gig economy is growing in Australia, as freelancing becomes a popular option for people who want more flexibility and control over their work-life balance.
Research from Upwork found one-third of Australians performed some form of freelance activity in 2015, which is the equivalent of 4.1 million individuals.
However, some financial experts believe people working in the gig economy could be missing out on crucial superannuation contributions to fund their retirement. This is because freelancers are typically classed as independent contractors, meaning they are not entitled to employer-funded superannuation.
"The whole idea was that we needed a universal system. It's not universal right now. Millions of workers are falling between the cracks of the superannuation system in this country," Tim Kennedy, national secretary of the National Union of Workers, told ABC Four Corners.
"That's important. That must happen for it to work. If you are a worker, you should be paid super. Full stop."
Any money paid into super funds in the early years of employment benefit from decades of compound interest, meaning young people are disproportionately affected when contributions aren't paid.
But it's not just freelancers in the gig economy who are risking their retirements. Overall, the country's employees missed out on $17 billion worth of super payments over the last eight years, according to figures from the Australian Taxation Office (ATO).
The ATO said employers appear to be shirking their super obligations and either short-changing their workers' pensions or simply not paying contributions at all.
Furthermore, many app-based services such as Uber and Deliveroo deliberately construct their business so that contractors form the bulk of the workforce.
A shortage of money for retirement isn't the only problem that arises when people don't make super contributions.
Many Australians currently receive life insurance through their super account, enabling them to receive vital coverage for critical illnesses or total and permanent disabilities (TPD). Without super contributions, workers may be left without a financial safety net if they were unable to return to employment.
Figures from Rice Warner already show an underinsurance problem in Australia. The median level of TPD cover is only enough to meet 13 per cent of a family's basic needs should something go wrong.
But people sometimes have more insurance than they think. This is particularly true for those who have switched jobs frequently over the years, as they may have multiple insurance policies across different super funds.
If you'd like to discuss a superannuation dispute, please contact Gerard Malouf & Partners Superannuation Lawyers to see whether you are eligible to claim life insurance benefits.