530,000 teen workers denied $411 million in super each year, new Super Members Council modelling shows
Super Members Council
New data finds half a million teen workers across Australia will miss out on $411 million in super this financial year due to an outdated rule that excludes under-18 workers from super if they work part-time.
Under this outdated law, workers under 18 are only guaranteed super if they work more than 30 hours a week for a single employer.
But Super Members Council CEO Misha Schubert said super should be paid from the first hour of your first job.
"More than half a million young Australians are missing out on a workplace right to super that 17 million Australians have – and that’s just not fair,” she said.
The Council’s latest analysis found this unfair exclusion now denies around 530,000 under-18s guaranteed super contributions – a jump of 25,000 more teens than two years ago.
These young Australian workers each miss out on an average of $780 a year in super contributions, adding up to a total of $411 million every year, a 7% increase on two years ago.
"Australia's super system is meant to be universal. This outdated age-based exclusion is denying hundreds of thousands of teenage workers the opportunity to start building their retirement savings," Ms Schubert said.
The Council’s analysis shows the problem is widespread, with 91% of under-18 workers employed for fewer than 30 hours a week, leaving the overwhelming majority of teen workers without guaranteed super.
A typical teenager who spends at least two years in part-time work before turning 18 could miss out on around $2,500 in super contributions by age 18. That lost super could compound to an $11,000 reduction by retirement (in today’s dollars).
Young women are more likely to be affected by the exclusion because they are more likely to work part-time than teenage men, with SMC analysis showing a typical young woman misses out on around $2,500 in super contributions before turning 18, about 6% more than a typical young man. By retirement age, this loss grows to around $11,200 for women, compared with $10,600 for men.
Ms Schubert said the latest data showed why it was crucial to help young Australians start building super as early as possible.
"The earliest contributions into your super make the biggest difference to how much super you’ll end up with because they have the longest time to grow. A few thousand dollars missed during a teenager's first years of work can become more than ten thousand dollars lost by retirement.
"The gender super gap doesn't suddenly appear later in life. For many women, it starts from their very first job. Scrapping this outdated exclusion would ensure the next generation of young women get a fairer start to their retirement savings."
Axing the under-18 exclusion would also simplify super obligations for employers by giving workers of all ages the same super entitlement.
SMC supports a transition period to allow businesses time to adjust to the change, like the approach taken when the former $450 monthly earnings threshold for super contributions was removed in 2022.
Because business owners can generally claim a tax deduction for super contributions, the estimated impact on businesses of paying super to all under-18s as a share of total compensation of employees, would be around 0.03%.
The reform has strong community support, with 85% of Australians agreeing those who do paid work should get super.
About us:
The opinions above are those of the author in their capacity as spokesperson for Super Members Council of Australia (SMC). SMC, the authors and all other persons involved in the preparation of this information are thereby not giving legal, financial or professional advice for individual persons or organisations.
Contact details:
Matt Read, [email protected], 0432 130 338