Aussies’ ‘terrifying’ super errors
YOUNG Australians are woefully unprepared for retirement, slugged fees that are too high in superannuation funds that are too risky and - in some cases - being fleeced of their contributions by dodgy employers.
It could cost them hundreds of thousands of dollars in lost cash that is rightfully theirs.
That's the conclusion of an investigation by the ABC's Four Corners that found the so-called gig economy (which has seen Uber and food delivery companies like Deliveroo thrive) is leading to an economic ticking time bomb.
The program also uncovered an email from a private super firm where it admitted it didn't want to "make it easy" for members to access lower fees.
Tim Kennedy, the Chairman of the LUCRF industry super fund said while enforced savings had made retirement more secure for many, job uncertainty and casual work meant it was "no longer fit for purpose".
A financier was more direct and said the financial future of Millennials was " … bleak. They are facing Game of Thrones; winter is coming".
'YOU TRUST YOUR EMPLOYER'
Australia's superannuation nest egg is by any measure huge. We currently have $2.5 trillion squirrelled way for our golden years, collectively the fourth-highest in the world.
But some young people who are working for an employer still aren't even getting their legal 9.5 per cent in super.
Lisa Pellegrino, 28, spent many years in hospitality, including a spell at a cafe in her home town of Bendigo.
Every week, her payslip showed a regular super contribution. But she said it was a lie that only became apparent when she checked her super account, only to find nothing in it.
"It was a big shock. You trust your employer to do the right thing and make the super contributions on your behalf," Ms Pellegrino told reporter Stephen Long.
"The owner had a talk with me and said that he was building townhouses and didn't have the funds to pay anyone's super because they were running behind schedule."
Her former boss told the ABC he had no idea what they were talking about, but Ms Pellegrino said she lost $6500 in 15 months.
In 2015, Australian employees were underpaid super to the tune of $3 billion, according to the Australian Taxation Office.
"It's just terrifying because those are the people who most need it. It's likely to be early inputs into super where those early-year dollars count, because of compounding, for so much," said Mark Carnegie, a venture capitalist.
"You hear story after story about how young people who have absolutely no financial expertise, see $100 or $200 and just ignore it, and yet it is going to be the kernel of the nest egg, which they're going to need in retirement.
"It's theft (and) it should be treated as theft," he said.
Associate Professor Sarah Kaine, an expert in the gig economy at UTS Business School, said it was rare for people with the likes of Uber and Foodora - who are often younger - to have super arrangements through the companies whose logos often plaster their clothes.
This was largely because they were classified as independent contractors.
"I was recently on a panel and the Australian representative of Deliveroo suggested that he would love to pay superannuation, but that would then imply that his bike couriers were employees, and they weren't prepared to do that," she said.
In a statement to the ABC, Deliveroo said they offered "flexible work" and 90 per cent of their riders were "happy".
"Those who are self-employed are able to contribute to superannuation in a way that is suitable for them," the company said.
Prof Kaine said she was worried: "It's a huge problem we're not dealing with. It's going to come back and bite us as people who have relied on freelance work, gig work, come to retire. Who will have to bear the burden of people without enough superannuation?"
HIGHER FEES FOR LOYAL CUSTOMERS
But even if our bosses are paying our super, the finance firms could be doing their best to take a greedy cut uncovered an email from Mercer, a US company that manages some superannuation funds in Australia, where it admitted withholding cheaper fees from existing customers.
The email said: "We do not intend to advertise the new lower fees to existing members and we don't want to make it easy for them to [a] find out about the new lower fees and [b] access them."
In a statement, Mercer said customers should access financial advice when they make investment decisions and that, "new products are not all directly comparable and may have different features or benefits to those issued previously."
Jeff Bresnahan, from super research company Super Ratings, said many Australians were simply in the dark about their super.
"They wouldn't have a clue where the money's invested, how much is coming out in fees, and, worst of all, many probably wouldn't even know the name of the fund that they're in."
And the fees aren't small - the industry siphons of $31m a year in them from Australian super accounts.
'GAME OF THRONES' BLEAK
The new MySuper accounts, introduced in 2014, were supposed to act as a low-fee low risk default option for the many people who don't take an active role in their superannuation savings. Like younger people.
But only 18 per cent of the money in funds run for profit has migrated to MySuper.
"We're talking tens of billions of dollars that probably should be in low-fee structures, that isn't," said Mr Bresnahan.
"If you've got a 2 per cent fee coming out of your account, year in, year out, versus a 1 per cent fee, then that could make something like a 30 to 40 per cent difference to your retirement benefit. It's like saying, 'Do you want to receive $500,000 or $750,000?' The decision's pretty easy."
Mr Carnegie said young people, for whom retirement is almost impossibly far away, were in a financially more difficult position than ever before.
"We have debt from HECS, we have unbelievable debt from trying to buy your first house, we have the prospect of seven, eight, possibly nine or ten jobs in your life, incredible uncertainty about where your next pay cheque is going to be.
"They are facing Game of Thrones. Winter is coming."