Australian teenagers could retire with A$11,000 less in superannuation because of an outdated workplace rule that excludes most workers under 18 from compulsory employer contributions, according to the Super Members Council.
As reported by The Canberra Times, the industry body is calling on the Federal Government to remove the restriction, arguing that more than half a million young Australians are being denied the same workplace right enjoyed by most employees.
Push for change
Current legislation only guarantees superannuation for employees aged 17 and under if they work more than 30 hours a week for a single employer. The Super Members Council estimates the rule excludes more than 90% of teenage workers, many of whom are employed on a casual or part-time basis.
The council said missing out on super early in a career has a lasting financial impact, as those contributions have decades to benefit from compound growth.
"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,'' Super Members Council chief executive Misha Schubert said.
"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."
Its modelling suggests a typical 16-year-old could miss out on up to A$2,500 in super contributions before reaching adulthood.
Unequal impact
The council said the rule disproportionately affects young women, who are more likely to work part-time and therefore fail to meet the 30-hour threshold.
Its analysis estimates women could retire with A$11,200 less in super, compared with A$10,600 for men.
"For many women, (the gender pay gap) starts from their very first job," Ms Schubert said.
Cost concerns
Business groups have urged caution, warning that extending compulsory super to all teenage workers could increase employment costs for small businesses.
"Small businesses are already managing rising employment costs, increasing compliance obligations and tight operating margins," Council of Small Business Organisations Australia chief executive Skye Cappucio told AAP.
"Governments should be careful not to introduce changes that make it more expensive to employ young people."
The organisation also warned that higher labour costs could discourage employers from hiring younger workers.
While the proposal was rejected by the Senate in July, the Super Members Council has suggested a transition period for employers. It estimates the additional cost would amount to just 0.03% of total employee compensation after tax deductions.
The council also said public sentiment favours reform, with around five in six Australians believing anyone who undertakes paid work should be entitled to compulsory superannuation.