Labor backs super for young workers

The Australian Labor Party (ALP) has committed to extending compulsory superannuation to all workers under 18, with the policy adopted into its national platform. This move is expected to improve retirement outcomes for young Australians.

Delegates at Labor’s National Conference unanimously voted to include a policy extending compulsory super contributions to all under-18 workers, regardless of how many hours they work.

Current Rules and Proposed Changes

The current requirement for employees under 18 to work more than 30 hours a week with a single employer before qualifying for compulsory Superannuation Guarantee payments excludes many young Australians working part-time or casual jobs.

The proposed change would remove this requirement, allowing all under-18 workers to receive compulsory super contributions.

This change is particularly significant, as many young Australians are engaged in part-time or casual work, and the current rules can result in them missing out on valuable superannuation contributions. By removing the 30 hours per week requirement, the ALP’s policy aims to ensure that all under-18 workers are entitled to compulsory super contributions, regardless of their working arrangements.

Industry Reaction

The Association of Superannuation Funds of Australia (ASFA) welcomed the policy, saying it would improve retirement savings for younger workers from the beginning of their working lives.

“If you’re working, you should get super, whether you’re 16 or 60,” ASFA chief executive Mary Delahunty said.

Rest also welcomed the policy, describing Labor’s decision as an important step towards fairer retirement outcomes for young workers.

According to Rest, scrapping the unfair requirement for under-18s to work 30 hours per week could add thousands to the retirement balances of their younger members.

Rest‘s chief member officer, Simone Van Veen, noted that the current rules can result in unfair outcomes, where a 15-year-old and an 18-year-old working side by side in the same job may have different entitlements to compulsory super contributions. This discrepancy highlights the need for reform, and Rest has encouraged the government to outline a plan for implementation.

Implementation and Impact

Rest encouraged the government to outline how and when the reform would be implemented, with a thorough consideration of the potential impact on employers.

The fund’s analysis showed that a typical 15-year-old member could accumulate an estimated $3,400 in additional super by age 18 and around $18,100 more by retirement, in today’s dollars, if the rule was removed.

Furthermore, Rest‘s modelling also revealed that typical 16 and 17-year-old members would experience meaningful gains in their superannuation balances if the 30 hours per week requirement was abolished.

During his address to delegates, Prime Minister Anthony Albanese highlighted the government’s broader workplace reforms, including the introduction of superannuation on Paid Parental Leave and the commencement of payday super.

The government’s commitment to extending compulsory superannuation to all under-18 workers is seen as a step towards improving retirement outcomes for young Australians, and the industry is eagerly awaiting the implementation details.

The introduction of superannuation on Paid Parental Leave, for example, has been a significant development, with Prime Minister Albanese noting that this reform has become “the law of the land.” The commencement of payday super is also expected to have a positive impact on workers’ superannuation balances, as it ensures that super contributions are paid at the same time as wages.

Overall, the ALP’s policy to extend compulsory superannuation to all under-18 workers has been widely welcomed by the superannuation sector, and its implementation is expected to have a positive impact on the retirement outcomes of young Australians.