Reports & research

Flexible work and superannuation

In today's changing workforce, the instances of flexibility are increasing. As individuals are opting for part-time roles or career breaks to care for loved ones, adjust to parenthood or simply enjoy work-life balance – their employers are coming to the party, by supporting flexible work arrangements. This flexibility undoubtedly provides immense, immediate benefits to workers and their families, as well as their organisations.

However, what is yet to be seriously considered is the impact on the individual's superannuation balance. With our current superannuation systems and policies in place, a high proportion of workers will face inadequate retirement incomes. Therefore, it is critical that we look closely at the situation, and make some adjustments to ensure a strong quality of life upon retirement for all Australians.

In this white paper, we assess the full impact of part-time or broken service on an individual's superannuation, including a case study for 'Jennifer', who meets the following description:

  • 22 years old as at 1 July 2015, with no current superannuation balance
  • a salary of $40,000
  • superannuation contributions at 9.5%, which will rise to 12% from 1 July 2025
  • an assumed salary growth rate of 2.5% per annum
  • investment earnings of 7% per annum, net of investment tax and all fees.

The case study demonstrates many gaps with the current superannuation scheme; most notably that if Jennifer spends time out of the workforce and/or participates in part-time work, it is impossible for her to achieve the goal of a comfortable retirement without voluntary contributions.

This white paper assesses the many options available to the Government, organisations and individuals to begin providing greater options for individuals engaging in part-time work or broken service, to provide a suitable superannuation balance to ensure a comfortable retirement.