In 2017, research commissioned by AustralianSuper found that an estimated 35.2 per cent of the employed workforce was in part-time or casual jobs - a figure that is growing at 0.35 per cent per annum1.
Many of these people work as part of the burgeoning gig economy. For some, this offers extra freedom and flexibility out of their work. For others, working in this way is a choice that is made for them due to the nature of the work they do or the industry they are in.
So what is the gig economy?
The gig economy broadly consists of self-employed people who find work on a task-by-task or contract-to-contract basis. The companies that pay gig workers aren’t often required to pay super. When you’re living job to job or contract to contract, and keeping track of your own taxes and payments, it can be hard to keep up with making the super contributions needed to secure your financial future.
If you’re a freelancer or contract worker or you’re thinking about exploring opportunities in the gig economy, it is important to know how to make the most of your super, and how you can work toward financial security.
1 More information on the research commissioned can be found here.
Find out if you need to make your own super contributions
What if you’re not actually employed by anyone, or are employed on a contract basis? In some cases, your employer will still be required to make super contributions, even if you are on a contract. But super can often fall on your shoulders, and you need to be proactive in keeping track of your contributions.
According to the ATO, if you’re a contractor paid mainly for your labour, then you might be considered an employee for superannuation purposes. That means you could be entitled to contributions paid into your super account by your employer.
If you are entitled to compulsory super, your employer is legally required to pay 9.5% of the value of your 'ordinary time earnings' (this includes shift loadings but not overtime payments) into your super account if:
you’re classified as an employee as opposed to a contractor in your work agreement2, and either
you're over 18 and earn more than $450 before tax in a calendar month, or
you're under 18 and you work more than 30 hours a week (and still earn more than $450 in the calendar month)
When you’re freelancing and being paid job-to-job by clients, making your own super contribution through a simple bank transfer is one way to make sure you’re keeping your financial future secure.
Most people will be able to claim a tax deduction for contributions they make to their super until they turn 75, although if you are over 65 you will need to satisfy the work test. Before you make any extra contributions, you should consider your debt levels as well as current and future financial commitments.
Locating all your super accounts could save you money
Do you know how many super accounts you have? Could there be lost super out there in your name? According to the ATO, Australians had amassed almost $18 billion in lost super as of June 30 20173.
When you’re taking responsibility for your own contributions, it’s a good idea to make sure you have all of your super in one place. It could help you save on fees and make it easier to manage your super, especially during the time where you’re taking a break from work and your contributions will be reduced or stopped.
If you’ve had more than one job, there’s a chance you’ve got accounts with more than one fund, and doing a simple super search could help track down any money that belongs to you.
To search for lost super, visit AusFund or the ATO website. AustralianSuper members can log in to their online account and give us consent to search on your behalf for any lost super you might be entitled to.
If you find lost super that’s in your name, you might want to consider combining those accounts into one. Before making a decision to combine multiple funds, look out for any fees or charges that may apply for closing an account, and make sure you understand the impact of combining your accounts on additional benefits like insurance.
In some circumstances, insurance cover linked to your super will lapse if there are no contributions or if that account falls below a specified balance threshold.
Another handy tip for those working in the gig economy is to keep track of how your super balance is progressing. You are able to see your super balance on your annual statement from your super fund, but it’s a good idea to keep an eye on it throughout the year. You can check and see how your super is performing by logging into your account online, or on your mobile device.
See if you are eligible for extra super from the government
With gig, contract and freelance work, your income can fluctuate throughout the year or from year to year, and at times when it is lower you might be eligible for extra contributions from the government to top up your super.
If you have a yearly income of less than $52,697 (before-tax), and you meet the eligibility criteria, the Government will match 50 cents for every $1 that you add to your super from your after-tax income up to a maximum. This could mean up to a $500 contribution from the government. The amount depends on your income. This co-contribution gets paid directly into your super account after you’ve lodged your tax return for that year.
YOUR TOTAL INCOME#
$52,697 or more
# Assessable income, plus reportable employer super contributions, plus reportable fringe benefits for the 2018/19 financial year.
Things to remember when you’re gigging
Working in the gig economy allows some people the flexibility to maintain the work-life balance they desire, and keep up variety in the work they’re doing. If gigging, freelancing, contracting or a mix of the three seems right for you, there’s a good chance you’ll find yourself juggling multiple employers, contracts or pay arrangements. With this comes the responsibility to check the progress of your own super.