Teen workers to miss out on $411m in FY27: SMC

The Super Members Council (SMC) said half a million teen workers across Australia will miss out on $411 million in super this financial year due to the current exclusion if they work part-time.

The SMC said the outdated law is prohibiting around 530,000 under-18 workers from their entitled super provided most of them don't meet the minimum 30-hour threshold, with 91% of under-18 workers employed for fewer than 30 hours a week.

According to its modelling, the workers each miss out on an average of $780 a year in super contributions, adding up to a total of $411 million every year, a 7% increase on two years ago.

A typical teenager who spends at least two years in part-time work before turning 18 could miss out on around $2500 in super contributions by age 18. That lost super could compound to an $11,000 reduction by retirement, the SMC noted.

Commenting, SMC chief executive Misha Schubert said super should be paid from the first hour of your first job.

"More than half a million young Australians are missing out on a workplace right to super that 17 million Australians have - and that's just not fair," she said.

"Australia's super system is meant to be universal. This outdated age-based exclusion is denying hundreds of thousands of teenage workers the opportunity to start building their retirement savings."

Notably, young women are more likely to be affected by the exclusion because they are more likely to work part-time than teenage men, as analysis showing a typical young woman misses out on around $2500 in super contributions before turning 18, about 6% more than a typical young man.

By retirement age, this loss grows to around $11,200 for women, compared with $10,600 for men.

Schubert reiterated it is crucial to help young Australians start building super as early as possible.

"The earliest contributions into your super make the biggest difference to how much super you'll end up with because they have the longest time to grow. A few thousand dollars missed during a teenager's first years of work can become more than ten thousand dollars lost by retirement," Schubert said.

"The gender super gap doesn't suddenly appear later in life. For many women, it starts from their very first job. Scrapping this outdated exclusion would ensure the next generation of young women get a fairer start to their retirement savings."

Axing the under-18 exclusion would also simplify super obligations for employers by giving workers of all ages the same super entitlement, she added.

The Labor government has recently pledged its commitment to compulsory super for under-18 workers, which was well-received by the industry including the SMC and Rest.

Another report by the Senate Economics Legislation Committee also supports the removal of the existing 30-hour threshold.

SMC said the reform has strong community support, with 85% of Australians agreeing those who do paid work should get super.

The SMC supports a transition period to allow businesses time to adjust to the change but noted business owners can generally claim a tax deduction for super contributions, and the estimated impact of paying super to all under-18s as a share of total compensation of employees would only be around 0.03%.