Most teenagers don’t work enough hours to get superannuation. This means they miss out on nearly $2,200 by 18. By retirement, this could be $10,000.
A new study by the Super Members Council shows a big problem. About 505,000 under-18s didn’t get super in 2024-2025. They lost an average of $730 each, adding up to $368 million. This old rule is hurting young Aussies’ retirement savings a lot.
Major Highlights
- About nine in 10 teenagers do not meet the 30-hour weekly threshold to receive superannuation contributions.
- Teenagers missing out on super can lose up to $10,000 in retirement savings by age 18.
- Over 500,000 under-18 workers were excluded from super in 2024-2025, costing them $730 each on average.
- 97% of Aussies believe super should apply to all workers, regardless of hours or income.
- Updating the rule could add just 0.03% to total employee costs during a phased transition.
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What’s the Current Under-18 Superannuation Rule
Superannuation can be tricky for young Aussies to understand. Workers under 18 don’t get employer contributions unless they work over 30 hours a week. This rule started in the 1990s, when super rates were just 3%.
It was made because small super balances could be lost to fees and insurance costs.
The 30-Hour Weekly Threshold Requirement
To get employer super contributions, young workers need to work 30 hours a week. This is a big hurdle for part-time or casual workers. They might not meet the hours, even if they’re working hard.
Historical Context of the Rule
The rule was set when super rates were much lower, at 3%. Now, with rates at 11.5% and going to 12% soon, the old worries seem less pressing. Also, new rules on fees and insurance for teens have helped.
Impact on Young Workers’ Rights
The rule is seen as outdated and unfair. It stops many young people from starting to save for retirement early. This can hurt their retirement savings in the long run, as early savings grow faster.
| Key Superannuation Facts | Details |
|---|---|
| Superannuation Guarantee (SG) Rate | 11.5% in 2024-25, increasing to 12% in 2025-26 |
| Fee Caps on Low-Balance Accounts | 3% per annum on administration and investment fees for balances under $6,000 |
| Government Super Co-Contribution Scheme | Up to $500 per year for those earning less than $58,445 |
| Low-Income Super Tax Offset (LISTO) | Up to $500 per year for those earning less than $37,000 |
The rule for under-18s in super is complex. It’s tied to history, today’s jobs, and future retirement savings. As super changes, so should the rules to help young Aussies save for retirement.
The Real Cost: Breaking Down the $10,000 Loss
The superannuation rule for under-18 workers is a big hit for young Aussies. Experts say the average under-18 worker misses out on $885 a year in savings. By retirement, this could grow to $10,200 thanks to compound interest.
Jess Dawson, a Melbourne uni student, worked in hospitality for 8-10 hours a week at 15. She would have gotten around $1,000 in super. This could have grown to $4,000 to $5,000 by retirement.
| Scenario | Projected Retirement Savings |
|---|---|
| Jess Dawson’s Superannuation Contributions | $4,000 – $5,000 |
| Average Under-18 Worker’s Missed Contributions | $10,200 |
The figures show how much the current super rule affects young workers’ retirement. Missing out on contributions early on can cut down retirement savings a lot. This can hurt their financial security and quality of life later on.
“The superannuation rule for under-18 workers is an outdated policy that fails to recognize the realities of modern workplaces. Young Australians deserve a fair chance to build a secure financial future through their compulsory savings scheme.”
How the Superannuation Rule Affects Young Workers Today
The superannuation rule for under-18s is unfair. It means they don’t get super unless they work over 30 hours a week. Jess Dawson, 21, wishes she could start saving for retirement sooner. She’s missing out on the benefits of preservation age and concessional contributions.
About 505,000 under-18s were left out of super in 2024-2025. They lost an average of $730 each, totaling $368 million. This rule hurts young workers, as most under-18s work less than 30 hours a week.
Common Work Patterns of Under-18s
Many underage workers keep their jobs, even if they work less than 30 hours a week. This is because 75% of them work for six to 12 months a year. It shows we need to change the super rule to fit today’s jobs.
| Key Statistic | Value |
|---|---|
| Percentage of under-18 workers employed 6-12 months per year | 75% |
| Percentage of under-18 workers working fewer than 30 hours per week | 92% |
| Number of under-18 workers excluded from super in 2024-25 | 505,000 |
| Average super contributions lost per under-18 worker | $730 |
| Total super contributions lost by under-18 workers | $368 million |
The current super rule doesn’t match the needs of young workers today. Changing it could help hundreds of thousands of young people. They could start saving for retirement sooner, gaining benefits of preservation age and concessional contributions.
The Scale of Lost Retirement Savings in Australia
In Australia, the superannuation system is complex. Recent studies show that about 375,000 young workers are missing out on superannuation. This means they lose around $330 million in retirement savings every year.
Even worse, the Super Members Council found that nine out of ten teenagers don’t get superannuation. This is because they don’t meet the 30-hour work rule. Millions of dollars in non-concessional contributions and retirement savings are lost for young Aussies each year.
| Statistic | Value |
|---|---|
| Approximate annual loss of superannuation in Australia | $2.5 billion |
| Affected Australian workers | Around 650,000 |
| Average annual loss per affected worker | $3,750 |
| Potential loss at retirement for a 25-year-old | $13,500 |
The construction industry is hit hard by superannuation non-compliance. Workers in this field face a big risk of losing their retirement savings. To help, funds like Cbus are checking superannuation payments for their members.
“The importance of engaging with superannuation by checking accounts frequently cannot be overstated. Employers are legally required to pay 9.5% of their employees’ salary into their superannuation accounts at least quarterly, and we need better resourcing of the ATO and enhanced communication between regulators and funds to ensure Australians receive their due payments.”
– The Association of Superannuation Funds of Australia (ASFA)
Why the Current Superannuation Rule Needs Reform
The rule on superannuation for under-18 workers is seen as outdated. The Australian super system has changed a lot. Fees and insurance costs were once a big worry, but now, with caps and limits, these issues are less pressing.
Outdated Policy Concerns
The 30-hour weekly rule was set to stop small balances from being eaten by fees and insurance. But, with fee caps and insurance limits for teens, this rule is no longer as needed.
Modern Workplace Realities
Young Aussies often work part-time or casually. The 30-hour rule is hard to meet, leaving many under-18s out of super contributions. This makes it hard for them to save for the future.
The super system needs to change to fit today’s work world. It should help all workers, young or old, to grow their retirement funds.
| Statistic | Value |
|---|---|
| Super Guarantee increase | 11.5% on 1st July 2024, set to increase to 12% by 1st July 2025 |
| Deeming rate freeze | Extended until 30th June 2025, remaining at 2.25% |
| $450 monthly earnings threshold | Eliminated on 1st July 2022, requiring employers to pay Superannuation Guarantee for employees earning less than $450 per month |
| Payday super contributions | Employers will be required to pay employees’ super at the same time as their salary and wages starting from 1 July 2026 |
| Budget allocation for payday super | $60 million to support employers in implementing payday super contributions |
The super system is getting better, with more Super Guarantee and a freeze on deeming rates. The $450 monthly earnings rule has also gone. But, the rule for under-18s needs to change to fit today’s work world.
Employer Perspectives and Administrative Challenges
Removing the under-18 superannuation threshold would make things easier for employers. They now have to keep track of hours for young workers to avoid fines. This is hard, mainly because many jobs are casual and super is paid out quarterly.
The Super Members Council says this change would only cost 0.03% more for employees. This small increase could help ensure all workers, young or old, get their full contributions. It would also help them build a strong compulsory savings scheme for retirement.
| Statistic | Value |
|---|---|
| Unintended multiple super accounts | 6 million, costing $450 million in fees |
| Superannuation Guarantee (SG) breaches | 1 in 4 workers affected, $5.1 billion unpaid in 2021-22 |
| Average superannuation underpayment | $1,800 per worker |
Employers might struggle with tasks like finding the right super fund for an employee. They also have to deal with rejected contributions. But, they can use super specialists, automate calculations, and get advanced payroll software. These steps can help solve these problems and keep them in line with the law.
“Unpaid or underpaid superannuation affects one in four workers in Australia, resulting in an average underpayment of $1,800 per worker.”
Employers face extra costs if they don’t pay super on time. It’s important for them to focus on super compliance. By tackling these challenges and following best practices, employers can help secure their workers’ financial future. This also helps avoid the extra costs of not following the rules.
Proposed Changes and Industry Support
Two big industry groups are pushing for changes to the superannuation rules for under-18s. The Super Members Council wants to remove the rule that only lets young workers with 30 hours a week get super. They say this change would help all workers, young or old, grow their retirement savings.
Rest, a big super fund, also supports this change. They found that 97% of their members think super should be for all working Aussies, no matter their earnings or hours. Both groups believe this change would help young workers’ savings grow, boosting their retirement income stream and preservation age.
Super Members Council Recommendations
- Remove the 30-hour-per-week threshold for under-18 workers to access superannuation
- Ensure all working Australians, regardless of age or hours worked, can contribute to their retirement savings
- Maximize the growth of young workers’ superannuation accounts
Rest Super Fund’s Position
Rest, a top super fund, backs the proposed changes. Their research shows 97% of their members want super for all working Aussies, without earnings or hours limits. Rest believes this change would let young workers’ savings grow more, helping their retirement income stream and preservation age.
“Making sure all young workers can get super, no matter their hours or pay, is key to their financial future. The Super Members Council and Rest’s support shows the industry cares about Australia’s future retirees.”
The Future of Youth Superannuation Rights
Advocates say every Australian worker, at any age, should have a chance at a dignified retirement. They believe super should start from the first job. This would make super for everyone, just like universal healthcare.
This change would give young workers the same rights as older ones. It aims to make superannuation fair and inclusive for all.
By covering all employees, young Aussies could start saving early. This would help them build up their retirement funds over time. It would also reflect the changing nature of work in Australia, where more people have casual jobs.
It’s important for all workers, including the young, to have equal access to super’s benefits. This reform would help the government’s goal of a comfortable retirement for all. It also tackles the special challenges millennials face.
As the debate goes on, it’s key to focus on the financial future of young people. This will ensure they have a secure retirement.
