Sydney, Jan 9: As thousands of young Australians take up summer jobs, the Super Members Council (SMC) is urging the government to abolish a rule that denies most teenagers superannuation contributions, costing them up to $10,000 in potential retirement savings.
Currently, under-18s only qualify for super contributions if they work more than 30 hours a week.
A new SMC report shows that approximately 505,000 teenage workers, or about 90 per cent of under-18 workers, fail to meet the 30-hour threshold, resulting in an annual loss of $368 million in super contributions.
On average, each under-18 worker misses out on $730 in super each year.
The report highlights that a typical teenager working for at least two years could accumulate $2,200 in super by age 18, which could translate into $10,000 more in retirement savings.
SMC Deputy CEO Georgia Brumby called on the government to address the outdated rule. “Let’s not leave our teen workers high and dry this summer. Change the law so they can earn super, no matter how many hours they work,” she said.
“Early career contributions are some of the most valuable by retirement. Every Australian worker, at every age, deserves the right to set themselves on the path to a dignified retirement.”
Brumby added that superannuation should be a universal workplace right.
“Super should be for everyone, paid from the first hour of your first job. Fixing this outdated exclusion is overdue.”
According to SMC research, 85 per cent of Australians believe that all paid workers should receive super contributions. When super was first introduced in the 1990s, the rate was just three per cent, and there were concerns that small balances would be eroded by fees.
Today, the super rate is 11.5 per cent, with caps on fees and limits on insurance for young workers to protect their balances.
Abolishing the 30-hour threshold would also ease administrative burdens on employers, who currently must track under-18 workers’ hours to determine eligibility.
It would further reduce the risk of underpayment, particularly during periods of increased staffing over summer.
Acknowledging potential concerns from businesses, SMC pointed out that tax deductions would lower the total cost to employers to around $260 million annually, adding only 0.03 per cent to total employee costs. SMC recommends a phased transition to allow businesses time to adjust, similar to the 2022 reform that required super payments for workers earning under $450 a month.
“This is a modest investment for our children’s future,” said Brumby. “SMC supports a phased transition and looks forward to working with employer groups to bring about this key reform in a way that enables a smooth implementation for business.”
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