While most workers now get paid super regardless of how much they earn, around 90% of under-18-year-old workers are locked out of Australia’s world class super system. That’s because outdated laws make them required to work over 30 hours a week to be eligible for super.

New analysis by SMC shows that U18s don’t just work holiday jobs for pocket money – they’re engaged in ongoing employment for savings and expenditure just like adult workers, with three quarters typically working 6-12 months a year.

Why are U18s treated differently?

When universal super was introduced in 1992, fees and insurance eroded smaller account balances. A 30-hour threshold was created so employers could avoid unnecessarily administering super. However, today small super account balances are protected from cost-erosion, with fees on balances less than $6000 capped at 3% (well below the average long-term return) and super funds barred from automatically offering insurance to new members in non-hazardous occupations under aged 25.

What needs to change and why?

Excluding U18s who work less than 30 hours per week from super is aged-based discrimination and the 30-hour threshold should be removed, so super is paid on all ordinary time earnings by U18 workers.

Making all U18s eligible for super benefits everyone

• Expanding super to all U18s helps young people better connect with our world class superannuation system by removing a confusing and disappointing super experience at the start of their working lives.

• It would deliver U18 workers a combined total of $330 million in super contributions annually, with the average U18 receiving an extra $2,600 in super contributions by age 18, growing to $10,200 at age 67.

• Taxpayers would benefit, given more savings in super means less reliance on the age pension and better outcomes for the federal budget bottom line.

Extending super to U18s also removes the administrative complexity for employers. The current 30-hour threshold requires employers to monitor which U18 employees exceed the threshold each week, which is particularly complicated when managing a large casual workforce and while super is still paid quarterly. Mandating that all U18s get super simplifies the administration for employers and takes away the risk of non-compliance.