Making all teenagers eligible to receive superannuation contributions would boost the future payout of more than half a million Australians and reduce red tape for business.
A new report from the Super Members Council found Australia’s under-18 workers would each have $10,000 more at retirement if current exclusion rules were abolished.
Super Members Council CEO Misha Schubert said under-18s were currently denied compulsory super contributions unless they worked more than 30 hours a week, due to a rule that was also complex for businesses to track and ensure legal compliance.
Ms Schubert said the report found about nine in 10 teenagers did not reach the 30-hour work threshold each week, denying about 505,000 teenage workers about $368 million in total super contributions a year.
She said paying under-18s super set their retirement saving on the right footing and gave their super the maximum amount of time to grow.
“Every Australian worker, at every age, deserves the right to set themselves on the path to a dignified retirement.
“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 Super should be for everyone, paid from the first hour of your first job, and fixing this outdated exclusion is overdue.”
Ms Schubert said the recent report found a typical teenager who worked for at least two years would benefit from almost $2200 in their super by the time they were 18 years old.
“This would mean they have $10,000 more (in today’s dollars) when they reach retirement age.”
Ms Schubert said research showed 85 percent of Australians thought anyone who did paid work should get super contributions.
“When super was introduced in the 1990s, the super rate was only 3 percent and there were fears the smaller balances of teens could be eaten away from fees and insurances.
”But now, the super rate is 11.5 percent paid on top of wages, and there are fee caps on low balances and limits on insurance for teens.”
She said removing the current 30-hour threshold would also simplify administration for employers, who currently faced the challenge of tracking hours for under-18 workers and lessen risks of underpayment.
“The analysis shows most under-18s are employed in either very large or very small businesses, and with tax deductions, the cost to business is only about $260 million a year.”
Read the full report: Guaranteeing a Super Start to Work.
