According to the latest Global Wealth Report from Credit Suisse:
- Australia has the highest net median wealth per person
- We have the second highest average net wealth per person
- We have a significantly lower percentage of low net wealth individual’s when compared to other Western democracies such as US and UK.
- We have the highest percentage of Millionaires per capita; and
- We make up only 0.4% of the world’s population but have 3.1% of the world’s millionaires; which means on an index basis we blow countries like America and China out of the water.
Who wants to be a Millionaire? Move to Australia.
Although economics isn’t my forte, I did take a keen interest during my time in University. These stats raised some interesting observations for me – both politically and from a legal perspective.
A big “thank you” to these stats in part is owed to compulsory superannuation – essentially what these stats are saying is that forcing people to save money increases overall net wealth. This isn’t exactly rocket science and we have to admit there are certainly people for who this system has worked for – those who may not have otherwise been able to save much. Introduced in 1992 it has changed the landscape of retirement savings. That isn’t to say the system isn’t without its fair share of issues.
We had a recent example of this – a doctor client of ours had a self-managed Super fund. He had invested quite a significant sum into an unlisted public company.
The company stopped communicating with shareholders (of which my client was one) due to some significant changes they were going through. Lack of communication always sends alarm bells.
Concerned – our client got in touch with us. He was resigned to the belief that his investment had all but gone. We managed to track down the lawyers working on behalf of the company and write to them. They supplied us with a updated report on the status of the company, in which they explained the company was looking to move forward and use its best endeavours to make a return to shareholders.
As this example demonstrates – superannuation is far from simple. There are many cogs to the system – governments, banks, lawyers, financial experts, businesses and of course, the employees.
Who is responsible for Superannuation?
One of the biggest areas of laws I have been involved in is the definition of employees versus contractors and who exactly is liable for Superannuation payments. It’s a sticky area for employers who are increasingly engaging contract workers – you can read my article on the topic here. Employers cannot circumvent their Superannuation obligations by “dressing up” their employees as contractors. The Superannuation Guarantee has very stringent rules around this.
The next significant shift of the Superannuation Guarantee will happen in 2021 when the super rate increases from 9.5% to 10%. Superannuation is a massive multi-trillion dollar industry in Australia – making it a political and legal hot potato.
If you engage contractors, you need to be aware of your financial obligations, and the legal consequences, of the Superannuation Guarantee.
Do you use Contractors?
If you have any questions about how the Superannuation Guarantee applies in your business, especially if you use contractors, please get in touch with the You Legal team.