More than half a million young workers are currently excluded from being paid superannuation, research has revealed. (Source: Getty)
An “outdated” superannuation rule will cost thousands of workers a combined $98 million in their retirement savings this financial year, new research has revealed. The law was created decades ago, and there are calls for an urgent overhaul.
Under rules designed in the 1990s, workers aged under 18 are only legally required to be paid super if they work more than 30 hours a week for one employer. This rule was initially designed to stop fees from eroding low-balance super accounts.
New analysis by the Super Members Council found 119,000 under-18 workers in NSW will miss out on an average of $815 in super contributions this year, to the tune of $98 million. Nationally, about 515,000 workers will be excluded from receiving a combined $405 million.
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Super Members Council CEO Misha Schubert said under-18s were being “shortchanged” in their retirement savings due to the rule.
“It’s time to fix it. The sooner you get super, the more it’ll look after you. Missing out on super before 18 can cost some young people $11,000 by retirement,” she said.
“Equal opportunity shouldn’t start at 18. Let’s give young workers a better future and pay super to all under-18s.”
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The super advocacy group found that a typical female teenager could have nearly $2,500 more in her super by the age of 18 if the rules were changed. This could grow into $11,000 more by retirement with investment returns.
A typical male teenager could have $2,000 more super by the age of 18, which would translate to an extra $9,000 by retirement. That’s due to males being more likely to already work in jobs where full-time hours are common, such as working as tradies or labourers.
One of Australia’s biggest super funds, Rest, has also supported calls for all young workers to earn super regardless of how many hours they work.
When the superannuation system was established in 1992, the rules for under-18s were put in place to ensure already low contributions and balances weren’t eaten away by fees.
However, the Super Members Council argues that this reasoning no longer stacks up as there are fee protections in place.
As part of the Protecting Your Superannuation Package, there is a 3 per cent cap on administration and investment fees for accounts with balances below $6,000.
In November, the Australian Greens moved an amendment to allow under-18 workers to be paid super contributions regardless of hours worked from July 1, 2026. However, this proposal was rejected by Labor and the Coalition.
The Australian Chamber of Commerce and Industry previously argued that introducing such a change would add an “extra layer of red tape” and add to “already high transactional costs for small business employers taking on young workers”.
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