A lawyer who established the Australian arm of forex provider IG Markets is backing “business to consumer” superannuation fund GigSuper, with plans for a $5 million capital raising slated for early next year.
Peter Richards, who was involved in getting the first Australian Financial Services licence to offer OTC derivatives to retail customers, has provided seed funding for GigSuper which was established this year.
The fund was created for self-employed workers or those working in the so-called “gig economy” who tend to have lower superannuation balances than employees, and 25 per cent of whom have no superannuation at all.
“I had the same eureka moment with GigSuper that I had with IG Markets. I was really taken by the concept of it. The name describes the very ecosystem in which we are going to be operating and I knew instantly there was something in it,” he told The Australian Financial Review.
The Association for Superannuation Funds of Australia estimates there are around 100,000 or 0.8 per cent workers in Australia who use web-based platforms, like Airtasker or Uber, to obtain work on a regular basis.
More traditional self-employed workers make up 10 per cent of the population and have an average super balance of $60,916 compared to $88,229 for employed workers. Female self-employed workers have superannuation balances that on average are around one-third lower than female employees and the male self-employed.
GigSuper co-founder Peter Stanhope, former head of sales at IG Australia, said when he and fellow IG Australia alumni and GigSuper co-founder Martin Batur first conceived the idea they planned to focus on the burgeoning gig economy and appeal to the likes of deliveroo riders and those who picked up work on sharing economy platforms such as Freelancer.
“But when we started digging we realised it was a much broader problem. Every other super fund [in the country] has been built to cater for employers and employees,” he said.
“The way people work is changing, you’re more likely to have multiple employers, but people drift in and out of employment and back to self-employment. So you’ve got the problem of having multiple super accounts but then you’ve got the problem for periods of time people not paying themselves super.”
GigSuper is the latest start-up looking to get a slice of Australia’s $2.3 trillion retirement savings landscape, joining the likes of Spaceship, Grow Super, Zuper and Human Super.
“The focus of traditional super funds has always been around getting employees. What’s starting to change, particularly with a lot of start-ups coming through, that instead of superannuation being a B2B play it’s starting to be a B2C play and that’s a different mindset,” said Mr Stanhope.
Mr Richards said it would be a “low-fee service”, offering members a traditional superannuation fund plus a built-in savings account which allows for contributions to be drawn upon as needed or transferred to their fund at the end of the financial year.
Members will be able to claim their voluntary super contributions as a tax deduction via an app rather than filling reams of forms, said Mr Stanhope.
“With existing funds, because they are not really for people to make voluntary contributions, there is not an easy way to manage that on a month-to-month basis,” said Mr Stanhope.
The founders of GigSuper will decide on its trustee and administrator early next year and plan to launch the fund by mid-2018.
The chief executive of ASFA, Martin Fahey, said in February superannuation must become more personalised and be available “on demand” if it is to remain relevant.
“We’ll see a world of work, but jobs may increasingly become a rarity, and super in that context will need to be personalised and be on demand. But it will also need to be ubiquitous and it will need to be in people’s lives every day of the week,” he said.