Powered by MOMENTUM MEDIA
SMSF adviser logo
Powered by MOMENTUM MEDIA

SMC calls on government to scrap 30-hour a week super payment rule

news
By Keeli Cambourne
January 13 2025
1 minute read
mary delahunty smsf
expand image

One of Australia’s peak superannuation bodies has called for the removal of an outdated law denying most teenagers up to $10,000 from their retirement savings.

The Super Members Council said under-18s currently don’t receive super contributions unless they work more than 30 hours a week, due to a discriminatory rule, which is also challenging for businesses to administer.

A report from the SMC found about nine in 10 teenagers do not reach the 30-hour work threshold each week, denying about 505,000 teenage workers about $368 million in total super contributions a year.

==
==

The report found that a typical teenager who works for at least two years would benefit from almost $2,200 in their super by the time they are 18 years old, which would mean they have $10,000 more when they reach retirement age.

The SMC analysis also found that about 505,000 under-18 workers were excluded from being paid super in 2024–25, missing out on an average of $730 each in super contributions – a combined total of $368 million.

SMC deputy CEO Georgia Brumby called on the Australian government to abolish the 30-hour threshold and guarantee all young Australian workers get a super start to work.

“Let's not leave our teen workers high and dry this summer. Change the law so they can earn super, no matter how many hours they work,” she said.

“Early career contributions are some of the most valuable by retirement. Every Australian worker, at every age, deserves the right to set themselves on the path to a dignified retirement.”

SMC research shows that 85 per cent of Australians think anyone who does paid work should get super contributions. When super was introduced in the 1990s, the super rate was only 3 per cent and there were fears teens’ smaller balances could be eaten away by fees and insurance.

But now, the super rate is 11.5 per cent paid on top of wages and there are fee caps on low-balance accounts and limits on insurance for younger workers to protect super balances.

Brumby added that removing the current 30-hour threshold would also simplify administration for employers, who currently face the challenge of tracking hours for under-18 workers.

It would also lessen risks of underpayment, which can be more challenging for businesses that increase staff hours over the summer.

SMC acknowledged the impact on some businesses but argued that with tax deductions the total cost to business is only about $260 million a year.

It recommended a transition period to give businesses time to adjust, as was done in 2022 when the Coalition government ended another exclusion and required super to be paid for workers earning less than $450 a month.

You need to be a member to post comments. Become a member for free today!