Getting super to people in the gig economy

The amount of people working casual jobs, like UberEats drivers, is increasing significantly in the time of the coronavirus.


The amount of people working casual jobs, like UberEats drivers, is increasing significantly in the time of the coronavirus.

GigSuper was created to help ensure those people are having their future looked after. It was co-founded by Peter Stanhop, Martin Batur, and Branka Injac Misic, GigSuper is currently going through a round of crowdfunding.

Stanhope shares his thoughts on why we need to support people working in the gig economy now more than ever.

You come from an investing/finance/UX background but not superannuation. What inspired you all to get into the industry?

After the many years between us working in retail finance, we found ourselves amongst the increasing number of people going out on their own - chasing personal development and work-from-anywhere opportunities.

And it came as a rude shock to us - because nobody teaches you this stuff - that we were responsible for our own super. And, because it was voluntary, we realised how easy it was to lump it in the 'too hard' basket and do nothing about it.

So it was no surprise to us when The Association of Super Funds of Australia (ASFA) predicted the majority of self-employed Australians will struggle to achieve a comfortable retirement.

Looking at the superannuation funds, and better understanding the origins of super, we felt there was a whole category of super that was underdeveloped - and that was self-employed super. So we built GigSuper.

You say that workers in the gig economy are struggling to keep up with super. In what ways?

Regardless of your age, occupation or financial circumstances, you probably have questions around super. Let's face it, the majority of people find super complicated. It's just that if you receive SG contributions a lot of the complication is taken care of for you.

When you're a gig worker, superannuation is voluntary and you are in charge of the whole contribution process as well. So it throws up additional complications like, "should I even do it?", "how much should I be contributing?", "where do I start?".

We know that in any given year, 70-80% of self-employed workers don't contribute to their super. Which means come retirement, they retire with 50% less super than someone who had an employer make contributions for them.

Think about that for a minute. You worked just as hard, for just as long, and you have half the super to sustain you in retirement.

Our '0 to 15 program' is addressing this imbalance head-on. By building a contribution process that meets the specific needs of a self-employed worker, our ultimate aim is to get our self-employed members contributing 15% of their earnings to super. It's a bold vision, but hey, so is starting a super fund.

On that, we're proud to say that our current members are on track to contribute 7% of their earnings towards their super this year, which is incredible given they were most likely saving nothing prior to opening their GigSuper account.

What are the barriers for a gig worker to contribute to a traditional fund?

When you break it down, there are two main categories of superannuation available to self-employed people - employer focussed and self-managed (SMSFs). However, neither of these options are ideal for a gig worker.

The existing offerings are simply not pitched to them - they'll either reference employers, SG contributions or, in the case of SMSFs, self-directed investment. None of these truly engage with gig workers, or the wider self-employed worker, on a personal level.

Some of the specific barriers a gig worker face include:

  • Not a lot of education around the benefits of super, regardless of whether you are earning a little or a lot i.e. government co-contributions and tax deductions.
  • Varying cash flows make it hard to commit money directly into super because you can't access it until retirement.
  • The paper-based process to claim a contribution as a tax deduction is complicated and disconnected from the actual process of contributing.
  • Some insurances make it difficult to qualify from group TPD or IP cover if you don't have an employer.

When you break it down, you can see why people get discouraged. So GigSuper was founded on the simple idea that you shouldn't need to be a finance expert to do super properly. Amongst other things:

  • We understand the power of just getting started. It can be hard to part with a big chunk of money at the end of the financial year. Saving smaller, weekly amounts is often easier to manage and members can start with as little as $10 per week.

  • We let our members save with confidence. GigSuper comes with two accounts, a Saver account and a Super account. The Saver account hooks up to their bank and accepts the weekly saving amount. Once a quarter, we'll transfer money from the Saver account to the Super account. However, members can access the money in your Saver anytime.

  • Our insurances include self-employed people in the definition of 'at-work' which makes it easier for them to be eligible for is one of the major requirements in claiming on TPD and IP.

  • Our investments come with a LifeCycle option that de-risks the portfolio as a member approaches retirement. This is particularly useful for members who have lower balances - and we know that self-employed people do - and may be part-pension funded in retirement.

You are going through the process of crowdfunding your fund. What are the benefits of using a model like this to establish your business? Challenges?

We were adamant from the beginning that we would one day offer the self-employed community an opportunity to invest in a super fund that was finally built for them. There is a nice symmetry in that idea.

Unfortunately, the self-employed community has been hard hit by the effect of the COVID-19 lockdown so we have pared back our target a little ahead of our wholesale raise later this year.

What kind of reception have you had to GigSuper?

When we talk to people about starting a superannuation for self-employed people, we generally get two types of responses:

  • Someone who never worked for themselves will ask, puzzled "why do self employed people need GigSuper when every fund accepts personal contributions".
  • Someone who has worked for themselves will simply nod their head in acknowledgement, and give us the "why hasn't somebody come up with this sooner" look.

But we totally get why somebody who has never been self-employed would question the value we bring to the market. But we take for instance one specific area where GigSuper is leading the way - tax.

When you're self-employed, claiming after-tax contributions as a tax deduction is a vital step in accessing the concessional tax benefits that employer contributions get automatically.

The average self-employed worker who fails to claim personal contributions as a tax deduction will have to earn $1.48 to get $1 into super, as opposed to $1.18 if they elect to claim it as a tax deduction. An investment manager would be hard-pressed to beat those one-year returns.

It's hard to believe that only 10% of personal contributions are claimed as a tax deduction.

Taking that into account, GigSuper is the first super fund that allows members to automatically indicate their intent to claim their personal contributions as a tax deduction.

So when we get asked "why do self-employed people need GigSuper?", one reason is we don't think our members should leave a tip on the taxman's table.

What were your first steps in creating the company?

We started with the headline problem that I mentioned before, which is that, on average, self-employed people are retiring with 50% less super than employees and worked back from there.

We felt like that was something that could, and should, be addressed.

Anecdotally we'd hear things like "self employed people don't want super or "they'd rather invest in their business" but we wanted to hear from other self-employed people directly because we knew from our own personal experience that wasn't the case.

So we ran some focus groups and had lots of conversations. From that we learned that, whilst self-employed people do feel like they are falling further and further behind with their retirement savings, they also had a bunch of questions they'd need answered before they'd consider doing something about their super.

It was then that we realised helping self-employed people understand the benefits of super and then guiding them through a contribution process that met their specific needs, we could have a significant impact on their retirement outcome.

Thankfully, we are not alone in wanting to solve this problem. There are many people and businesses in the self-employed ecosystem that are willing to help us on this journey; from gig platforms to co-working spaces and online self-employed communities, we are establishing a network of partnerships that are aimed at helping self-employed people turn something that was previously a weakness in their business into a strength.

After 2.5 years of development, in January 2020 we finally launched to the public.

Given the early feedback we're receiving from customers and the data points we have on their usage of the product, we're confident we're on the right track. So we're now turning our attention to scaling up our educational and distribution activities across the self-employed ecosystem.