ISA takes stance against age discrimination in super

Industry Super Australia (ISA) is campaigning to make the superannuation system more inclusive by opening up contributions to workers under the age of 18, who lose out on almost $10,000 from their retirement under current legislation.

ISA analysis showed around 375,000 workers across Australia would receive on average $885 in extra super contributions in 2023–24 if this “discriminatory legal relic” is removed. 

Currently, under-18-year-old (U18) workers are only entitled to super if they work over 30 hours per week for the same employer. 

However, research found the majority (90 per cent) of teenagers work less than 30 hours per week and are therefore not entitled to super, although 75 per cent of this workforce are employed for six to 12 months a year.

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“This is an out-of-date law that discriminates against our youngest workers just as they’re starting out — it’s unfair and the law needs to be modernised,” said Bernie Dean, ISA chief executive.

The industry body noted that excluding U18 workers from super was initially negotiated upon introduction of the legislation in 1992 as it was feared fees and insurance would erode smaller super balances. 

However, fees are how capped on lower account balances and insurance is not automatically offered to super members who are under-25 and have a balance of less than $6,000.

Dean added: “Locking thousands of teen 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?”

Data from the Household, Income and Labour Dynamics in Australia Survey (HILDA) waves 17–21 found super guarantee coverage increases with firm size and large firms (with over 100 employees) tend to pay super for U18 workers even when not legally required to do so. 

However, over half of teenage workers (57 per cent) are employed in businesses with less than 100 employees.  
“I don’t think you’d see many employers wanting to share that message at the start of employment, about 'Here’s something you don’t get but everyone else does’,” said Julia Fox, national assistant secretary of the Shop Distributors Association.

“I’d rather see employers move to actually paying it because it’s fair and it’s the right thing to do.”

According to Caitlin Figueiredo, co-chair of the Australian Youth Affairs Coalition, ISA’s campaign will resonate with young workers who don’t agree with this legal age-based discrimination rooted in the system.

“[This] is a really key, powerful message for most young people. It’s straight and to the point — you shouldn’t have to wait till you’re 18 to be eligible in super. If you have a job, if you pay tax, you deserve super,” Figueiredo said.

ISA’s senior economic research adviser and author of ISA’s Super Start to Work Report, Tina Samardzija, outlined how changing the legislation also offers benefits to employers.

“It will make things simpler for employers to understand when they need to pay super and for employees to track their super, how much they’re entitled to,” she said.

Presently, employers are required to monitor which U18 employees exceed the threshold each week, a job made more complex in industries, where casual workers are prevalent and where employers only pay super quarterly.