Guaranteeing a super start to work

Australia’s super system was designed to be universal – for everyone – so the breadth of the Australian community can reap its rewards for retirement.

But Australians under the age of 18 are currently only required to be paid super if they work more than 30 hours a week for the one employer.

This age exclusion causes confusion and frustration for both teens and businesses. It’s complex for business to track and administer – and it can lead to some young people having a super account opened and shut for them several times before they turn 18.

The under-18s exclusion pre-dates the creation of digital payroll software – and its intent was to stop fees and insurance premiums from eroding low-balance accounts.

But today there are fee caps and stronger protections on low-balance accounts, so excluding under-18s who work 30 hours or less a week is age-based discrimination.

Australians strongly support universal super, with 85 per cent saying anyone in paid work should be paid super. This support for making super universal is consistent across all parts of the Australian community.

The earlier workers start saving, the greater their compound returns will be. For a median wage earner, compound earnings account for between two-thirds and threequarters of a super nest egg at retirement.

Paying super to all under-18s would see a typical teenager who works for at least two years benefit from almost $2,200 in their super account by the time they turn 18.

This is projected to grow to almost $10,000 (in today’s dollars) as they reach retirement age.

About 505,000 under-18 workers will be excluded from paid super in 2024-25, missing out on a combined total of $368 million in super contributions.

Analysis shows the majority of under-18s who work are in ongoing work – with more than half (51 per cent) of under-18s working across the whole year or most of the year, dispelling the myth that under-18s only work for pocket money.

Making super universal would means less reliance on the Age Pension long term, which means less pressure on the Federal Budget and all Australian taxpayers.

Removing the 30-hour threshold would ease the administrative risk on employers, who must currently identify which under-18 workers exceed the 30-hour threshold each week. This is more complex in industries where casual work is widespread and where workers’ super accounts get closed by a fund when left inactive for too long.

Removing the exception would mean employers have a consistent approach to administering super for all under-18 workers.