Economic Policy

Scrap the Under-18 Superannuation Carve-Out

Make superannuation fairer

Scrap the Under-18 Superannuation Carve-Out

Under the current system, workers under the age of 18 are only legally guaranteed super if they work more than 30 hours a week for one employer.

The outdated exclusion was originally made to avoid fees eroding low-balance super accounts, but that reason no longer stacks up now there are fee protections on small super balances.

The current age-based minimum hours rule means most teenage workers, especially young women who are more likely to work part-time, are not yet paid super on their wages.

Some employers do the right thing and pay super anyway — and that’s fantastic. But the problem is, they don’t have to. And fairness shouldn’t depend on how generous your boss happens to be.

Women currently retire with 25 per cent less super than men, and the gender super gap can start from their very first day at work.

We need to change the system to be fairer and reflect the modern workforce.

Scrapping the 30-hour threshold for under-18s would make super fairer and help close the gender super gap. It would also make legal compliance easier for employers, and smooth the start to work for teenagers.

What benefit would this change bring?

This change would benefit all people under-18 and their eventual retirement savings. This change would also reduce the gender super gap because teen girls are more likely to work in jobs that with typically fewer hours than the current 30-hour super threshold for under-18s.

According to the Super Members Council, a typical teenage girl could have nearly $2,500 more super by age 18, which could grow into
$11,000 more by retirement with investment returns. While teenage girls are 55 per cent of all under-18 workers, they are only 35 per cent of the teenage workforce currently guaranteed super due to the 30-hour rule.

A typical teenage boy could have $2,000 more super by age 18, and $9,000 more by retirement. Teen boys under 18 are more likely to work as tradies and labourers, where full-time hours and apprenticeships are common, giving them guaranteed super.

That might not sound huge to some, but it’s real money. It’s groceries for a year. It’s the difference between having a full fridge and worrying about making ends meet.

It’s time to scrap the under-18 carve-out and get rid of the 30-hour rule, and make sure every worker earns super from their first hour of work.