A law that denies super contributions to South Australians aged under 18 years has been slammed as a “discriminatory legal relic”.
Industry Super Australia (ISA) said the law could ultimately cost young Aussies more than $10,000 at retirement, with around 28,000 SA workers being impacted. The law locks out under-18s who work less than 30 hours a week from the Aussie super system.
ISA modelling found the law could cost the state’s youngest workers about $26 million a year in super contributions.
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If the SA workers were eligible for the super guarantee, they would receive an average of $945 a year. If invested in a high-quality super fund, these small contributions could grow to $10,200 by the time a teen worker retired.
ISA’s Super Start to Work Report revealed the 30-hours-per-week super threshold denied 375,000 Australian teen workers super payments, costing them a total of $330 million a year.
“This early-career discrimination not only financially penalises young workers, it creates an administrative burden for employers who must keep track of the hours under-18s work,” ISA said.
“[It’s an especially complex task as under-18 workers are highly casualised and many of their employers pay super quarterly.”
ISA said that when super was introduced in 1992, excluding under-18s was negotiated into the legislation because it was feared fees and insurance would erode smaller super balances.
But now fees are capped on lower account balances and insurance is not automatically offered to super members who are younger than 25 and have a balance of less than $6,000.
“This is an out-of-date law that discriminates against SA’s youngest workers just as they’re starting out – it’s unfair and the law needs to be modernised,” ISA CEO Bernie Dean said.
“Locking thousands of the state’s young workers out of our world-class retirement-savings system is not giving them the super start to work they deserve. How can we explain that young workers don’t get super while an older colleague doing the same job does?
“Removing the 30-hour threshold wouldn’t just be fair for young workers, it would be good for the employers who have to face the administrative nightmare of keeping track of the weekly hours of a highly casual workforce.”