18-year-olds’ exclusion from super is outdated, says SMC
The peak super body has called for the abolition of the exclusion of under-18 Australian workers from superannuation payments.
New research from the Super Members Council (SMC) revealed that under-18 workers could have $10,000 more at retirement if an exclusion that denied them super contributions is eradicated.
According to SMC, workers under the age of 18 are currently denied compulsory super contributions unless they work more than 30 hours a week.
The obligation was enforced due to a “discriminatory rule” that was too complex for businesses to track and ensure legal compliance.
SMC CEO Misha Schubert said the rule should be abolished as all workers no matter their age deserved the right to superannuation payments.
“Every Australian worker, at every age, deserves the right to set themselves on the path to a dignified retirement,” Schubert said.
“Australians strongly support universal super and know it’s a workplace right. Super should be for everyone, paid from the first hour of your first job, and fixing this outdated exclusion is overdue.”
“As every smart investor knows, thanks to the magic of compound returns, a dollar invested early in life in super has the most power to grow our retirement savings exponentially over our lives.”
The research found nine in 10 teenagers did not reach the 30-hour work threshold each week, which denied 505,000 teenage workers $368 million in total super contributions a year.
It was also revealed that 85 per cent of Australians believed anyone who did paid work should be compensated with super contributions.
When super was introduced in the 1990s, the rate was only 3 per cent which created fears the small balance on teens would be eaten away from fees and insurance.
The current super rate was measured at 11.5 per cent paid on top of wages, and there are mow fee caps on low balances and limits on insurance for teenagers.
SMC said a typical teenager who had worked for at least two years could have earned as much as $2,200 in super contributions by the time they had reached 18, meaning teens are missing out on a lot more now than in the 1990s.
The peak super body called for the removal of the 30-hour threshold and argued it would simplify administration for employers, as they would no longer have to track hours for under-18 workers.
Schubert said the SMC acknowledged the impact this would have on some businesses and recommended a transition period to allow them to adjust.
“This recommendation to make super universal for under-18 workers is a crucial step towards an even fairer and more inclusive super system.”
“It will help young Australians to have a consistent and positive experience of Australia’s super system from the start of their working lives.’
“This is a modest investment for our children’s future- adding just 0.03 per cent to total employee costs.”
SMC noted it supported a phased transition and looked forward to working with employer groups to bring about the key reform in a way that enabled a smooth implementation for business.
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