Time to read : 3 Minutes
Unfair Super Laws Robbing Younger Workers
A legal loophole denying super contributions to under-18-year-old workers could potentially cost them upwards of $10,000.
It seems that sometimes super is, well, not so super.
The 'discriminatory' law affects approximately 375,000 of Australia’s youngest employees, who are largely excluded from our world-class retirement system due to their inability to meet the 30-hour weekly requirement from a single employer.
“This is an out-of-date law that discriminates against our youngest workers just as they’re starting out – it’s unfair and the law needs to be modernised,” says Industry Super Australia Chief Executive Bernie Dean. "The current law not only deprives young workers of a super start to work but also creates an administrative burden for employers."
Key points (TLDR):
The legal loophole affects approximately 375,000 of Australia’s youngest employees.
Over 90% of under-18 workers are denied super contributions most weeks due to their inability to work 30 hours per week.
The regulation save employers nearly $330 million a year in super contributions.
The 30-hour weekly threshold discriminates against young workers and creates an administrative burden for employers.
Parents are encouraged to step in a check whether their kids are being fairly compensated.
What's this law costing you?
Industry Super Australia (ISA) suggests the regulation could cost nearly $330 million a year in super contributions for workers under 18.
The average young worker is estimated to miss out on an additional $885 a year in super contributions. With decades of potential investment returns, this sum could grow to $10,200 by the time they retire at 67.
What's being done about it?
ISA's Super Start to Work Report advocates for the removal of the 30-hour weekly threshold, arguing that it unfairly discriminates against young workers at the beginning of their careers.
The report also highlights the administrative burden this law places on employers required to monitor the hours worked by under-18s – a task made more complex given the highly casualised nature of this workforce.
The majority of under-18 workers are denied super contributions most weeks, as over 90% of teenagers typically work fewer than 30 hours per week. Paid work is a regular part of life for most teens, with 75% of the underage workforce employed for 6-12 months a year.
How did this happen?
The exclusion of under-18s from super was incorporated into the 1992 legislation due to concerns about fees and insurance eroding smaller super balances. However, the landscape has changed, with fees now capped on lower balances and insurance not automatically offered to super members under 25 with a balance of less than $6000.
Removing the 30-hour threshold could encourage earlier engagement with the super system. A UMR survey of 1075 respondents found near universal support for the payment of super for all workers, with 85% agreeing that super should be paid to all workers.
The Bottom Line:
Firstly, check with your child's employer whether they're being fairly 'supered', then encourage your kids to be more engaged with super and checking their pay slips.
If your child is working fewer than 30 hours a week, see if they can ask for a enough hours to get them over the threshold, otherwise.
Sit tight and hope this discriminatory law is changed soon.
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Financial disclaimer
The information contained on this web page is of general nature only and has been prepared without taking into consideration your objectives, needs and financial situation. You should check with a financial professional before making any decisions. Any opinions expressed within an article are those of the author and do not specifically reflect the views of Compare Club Australia Pty Ltd.
