If you migrate to Australia, your superannuation might not be so super.
The average balance for those from a non-English speaking background at retirement is about 30 per cent lower than the general population, at $320,000 compared to $460,000.
The gap starts to emerge as early as your mid-20s and widens as you age.
And while there has been substantial growth in superannuation balances over the past decade, the savings of people from non-English speaking backgrounds “fall well short of the amounts needed for sustaining a comfortable lifestyle in retirement”, according to a 2024 report from the Association of Superannuation Funds of Australia.
So why are super balances for migrants so low, and what is being done to fix it?
How migration can derail your career, and your super
Superannuation is built on the financial wizardry of compounding returns.
Regular contributions to an investment portfolio grow slowly in the early years of your career but accelerate as your savings, and earnings on your investments, increase.
Contributions are calculated as a percentage of your income, a minimum of 11.5 per cent from July, so the more you earn, the more goes into super.
But migrants like Hong Kong expat Eunice Au often struggle to find jobs at a comparable seniority and salary as when they worked in their home country.
“When we apply for senior roles, they say, ‘Oh, you don’t have the experience because your experience was overseas and it’s not applicable here,'” she said.
“It is very bad and I have lots of friends who couldn’t get back to what they used to do.”
Rachna Madaan Bowman, a financial counsellor with multicultural support organisation South East Community Links, said many migrants and refugees spend years working in unrelated fields or for lower pay after coming to Australia.
And every year spent earning less, means less money for super.
“You could be a trained nurse in your own country, but you are working in a factory just to make ends meet,” she said.
“You could be a teacher or a doctor, but it takes time for you to get your qualification recognised.
“There’s a lot of hoops to jump through but in that time, you still need to provide for yourself and your family.”
Superannuation can be super confusing
Ms Madaan Bowman has seen cases where dodgy employers don’t pay the super of migrant workers but that’s just one of many problems facing migrants trying to save for retirement.
“It all comes down to limited access to information and education around what their options are, and there’s a lot of misinformation,” she said.
A major concern is the increased use of chatbots and voice-to-text technology by service providers, technology that can be a nightmare for those who speak English as a second language.
“And then you’ve got complex financial products,” she said.
“How do you make an informed decision? Financial advice is not cheap. And who do you trust to make an informed financial decision when your language might be limited?”
Fees and family prevent super top-ups
Afghan refugee Mohsin Hazara sought asylum in Australia in 2011 and has worked hard to secure a good job.
But the years needed to settle and study mean migrants like him start their careers later than locals, reducing the number of years they have to build up their super.
“By the time we learn the language and start navigating the community, we also have to acquire skills and work experience to secure a job,” Mr Hazara said.
“I am concerned that with the current path, my superannuation will not be sufficient for retirement.”
Mr Hazara wants to make additional super contributions but struggles due to the need to repay his student loans.
“And having so many challenges back at home makes the people not top up on their superannuation,” Mr Hazara said.
“Refugees and asylum seekers do send some money back home, especially people from the Afghan Hazara community after the fall of Kabul, to support their families.”
Mr Hazara has even met people in his community, some as old as 50, who don’t have any superannuation at all.
“Most explained that as ABN holders, they believed they did not need to contribute to superannuation because they already pay taxes,” he said.
“However, they are missing the fact that they can and should make superannuation contributions regardless of their income, even in small monthly amounts, as many subcontractors do.”
So what is being done to close the gap?
The federal government has been tinkering with the superannuation system to help both locals and migrants save for retirement.
The compulsory contributions are being ratcheted up from 9.5 per cent in 2020 to 12 per cent in 2025.
Employers will be required to pay staff superannuation entitlements at the same time as wages from July 2026.
The financial sector is also taking note, with the Association of Superannuation Funds of Australia (ASFA) commissioning research to determine the cause and solution to the super gap.
ASFA chief executive Mary Delahunty said the system was meant to “equalise and bring some dignity” to retirement and it could serve the migrant community better.
One area of concern is the gig economy, a sector often dominated by migrant workers.
“We need to revisit whether or not superannuation payments should be a part of gig work and a part of really every dollar earned,” she said.
“Because it not only provides people with a more comfortable retirement or chance of a more comfortable retirement, but it also takes pressure off the public purse.”
Ms Delahunty said while the super industry was working to close the gap, the system simply “magnifies working patterns” in the real world.
“And so the real drivers of change are in the labour market,” she said.
Catherine Scarth, chief executive of settlement agency AMES Australia, said more needed to be done to connect skilled migrants to their chosen profession “as soon as possible”.
“If an engineer comes and they’re driving a taxi for three, four or five years until they can get a job, that has two critical impacts,” she said.
“The economy is missing out on a skilled professional engineer … and they’re having a reduced income during that time, five years less of being able to contribute to their super at that higher salary.”
“That’s why it’s so critical that we connect people early. It’s obviously good for the economy, but it’s good for them, not just now but into their retirement.”