Are you a ‘Super’ Woman?

Embracing superannuation as part of your regular financial planning. 

Given we have started a new financial year, I thought that now is a good time to share some perspectives on superannuation that have been bothering me for months.

When I started out on my own, I set up Sparrowly Group as a sole trader entity and freelanced. My first contract was a full-time contract for 8 months. 

My accountant told me that I was eligible for superannuation under the superannuation guarantee but because I had already signed my contract, I was too embarrassed to ask for what was legally owed. So, I said nothing and missed out on $7, 600 of superannuation owing to me. And the organisation I contracted to, let it happen...

I vowed that I would not make that mistake again, and with that ensured that superannuation was a priority for me as a business woman and owner - and not just the minimum 9.5% payment. Since Sparrowly Group started in 2015, I have ensured that I have put aside each month the maximum amount of superannuation contribution I can make as a business owner which has meant forgoing salary. This means in 4 years, I have contributed $105, 000 into superannuation in order to make the most of superannuation benefits.

According to the CEO of Australia’s first superannuation fund for women, Verve Super, Christina Hobbs, “being self employed can be liberating, but the idea of retiring can often hang above the head of a self-employed woman like a dark cloud. As any small business owner knows, it’s not always easy finding the money and making the decision to contribute to super.

“Self-employed women are particularly likely to struggle with retirement planning.

Australia’s superannuation system is linked to paid work, so it naturally disadvantages people
who take significant time out of the paid workforce to care for family members or work flexibly.

The average Australian woman retires with around 47 percent of the super of the average man. For women aged in their 60s, the average super balance for wage and salary earners is $175,000 – double the average balance of $83,000 for women who run their own business.”

So what do we need to do as business owners not just for ourselves, but also, what is the right thing to do for any staff we have that contract to us (as opposed to payroll) that fall under the superannuation guarantee?

Firstly, as a business owner, knowing that you can claim an annual tax deduction for up to $25,000 in “concessional” (before-tax) super contributions, rather than saying I can’t afford to put aside $25, 000, at least put aside and make a contribution of what every employee in Australia should get - 9.5% of your salary. If you aren’t pulling a salary yet in your business, make sure this 9.5% is budgeted in as a must do. Saying you can’t afford at least the minimum owed to every Australian PAYG employee should be a beacon to you as to whether you should be in business in the first place. 

If you’re  a sole trader, check and stay across the superannuation guarantee rules and ensure if superannuation is owed to you, that it is written into your contract and paid. I have seen too many shonky “consultancies” not paying their staff superannuation thinking if they opt for contractors they can sidestep this. It was this behaviour that led to the superannuation guarantee coming into play.

Make sure you have a great accountant, and spend time with them to understand what your rights are (if you are a sole trader), work with them on your company tax planning (we meet with our accountant formally each quarter to review company performance and our tax planning model to ensure we are on track and always doing the right thing) and if you are a business owner, make sure you do the right thing and pay your staff - PAYG or contracting what is rightfully owed to them. 

That’s just ethical business.