U18s denied compulsory super takes toll: ISA

Yasmine Raso

Senior Journalist, Financial Newswire

12 July 2023

A new report from Industry Super Australia (ISA) has found the exclusion of under-18-year-old workers from compulsory super contributions is costing them more than $10,000 by retirement.

The Super Start to Work report and modelling completed by ISA found approximately 375,000 young Australian workers are not entitled to compulsory super contributions under the legislation introduced in 1992, unless they work more than 30 hours a week for the same employer.

Initial fears that fees and insurance would eat into smaller super balances brought the 30-hour threshold into existence, but fees are now capped on low account balances and insurance is not automatically offered to under-25-year-olds and members with a balance of less than $6,000; leaving workers under 18 years of age unable to claim approximately $330 million a year in super contributions.

On average, workers under the age of 18 would receive an extra $885 a year in super contributions, which could potentially grow to $10,200 by the time they entire their retirement phase at the age of 67.

“This is an out-of-date law that discriminates against our youngest workers just as they’re starting out – it’s unfair and the law needs to be modernised,” Industry Super Australia chief executive, Bernie Dean, said.

“Locking thousands of teen workers out of our world class retirement savings system is not giving them the super start to work they deserve. How can we explain that young workers don’t get super while an older colleague doing the same job does.”

The report from ISA calls for the 30-hour threshold to be cut from legislation, classifying it as “early career discrimination” for young workers as well as an “administrative burden” for employers to track the hours worked by those under the age of 18 in mostly casual positions. More than 90 per cent of teenagers work less than 30 hours per week and are not entitled to super, despite 75 per cent of them being employed for six to 12 months a year.

“Removing the 30-hour threshold wouldn’t just be fair for young workers, it would be good for the employers who have to face the administrative nightmare of keeping track of the weekly hours of a highly casual workforce,” Dean said.