The changing nature of employment will have dramatic effects on the superannuation industry and retirement incomes. The Federal Government should prepare for the impact now rather than react in haste.
This is a key recommendation from the Financial Services Council, which used its 2018-19 pre-budget submission to call for an inquiry via the Productivity Commission into the impact of potential changes in the labour market. This would include automation, self-employment, contractors and the 'gig economy' on tax revenue, superannuation, life insurance, and retirement savings.
"The nature of employment is changing. The era of job certainty, regular hours, and little or no part time work is over," the submission said.
"The Government and the economy more broadly would be better prepared for these types of developments if a detailed inquiry occurs now, before major disruption occurs."
Of specific concern to the FSC is the regulatory gap which exempts self-employed persons from having to put funds aside for retirement (via the superannuation guarantee). This, the FSC said, results in substantially lower superannuation balances for the self-employed, and increases the risk of underinsurance.
A discussion paper released by the Association of Superannuation Funds of Australia estimated there are about 100,000 workers in Australia who use web-based platforms to obtain work on a regular basis, or around 0.8% of the Australian workforce - and the numbers are set to grow.
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Speaking to Financial Standard last year, ASFA chief executive Martin Fahy placed the impact of the changing nature of the workforce and how the industry will remain relevant to a contingent workforce gaining speed as one of the key issues for superannuation going forward.
While still far off in the minds of many industry professionals, Fahy sees this as a now problem, and is actively looking to see how superannuation can reinvent itself for the Uber drivers and Airtaskers of the world.
"The gig economy is going to transform the workplace in ways we don't expect," he argued.
"We'll see a world of work, but jobs may increasingly become a rarity, and super in that context will need to be personalised and be on-demand. But it will also need to be ubiquitous and it will need to be in people's lives every day of the week.
"To remain relevant, superannuation must recognise the difference between compulsion and compelling. It needs to engage with digital platforms, and it needs to be part of the gig economy in the same way that it is with traditional employers."
Options for adjusting current superannuation settings put forward by ASFA include: extending coverage of the SG to independent contractors and the broader group of self-employed workers; and removing the $450-a-month wages threshold for the SG to be paid to employees.