CHEYANNE ENCISCO: Under-18s super carve-out costing WA teenagers $36m in lost contributions

WA teenagers will miss out on about $36 million in superannuation contributions this year because of an outdated law, prompting fresh calls to scrap the legal carve-out for under-18s.

Under existing laws, under-18 workers are only legally guaranteed super if they work more than 30 hours a week for one employer.

While this exclusion was initially made to prevent fees eroding super accounts with low amounts, industry body Super Members Council argues the rationale no longer stacks up given existing fee protections for small balances.

New analysis from the council revealed 54,000 under-18 workers in WA would miss out on an average of $655 each in super this financial year.

About 515,000 workers nationally will be excluded from a combined $405m.

Inglewood resident Sarah Dennis, who works at a discount department store, only started earning super when she turned 18 last June despite having worked since she was 15 years old.

In speaking with the retail workers union, she realised her super would have been double the current amount of $1200 if the laws were different. Ms Dennis said she felt disadvantaged by the law.

“That’s a lot of money (I wasn’t getting) for doing the exact same job as someone else,” she said.

“Even if you’re under 18, you should still be earning super because that’s the best time to start, when you’re young.”

SMC chief executive Misha Schubert said the 30-hour threshold would shortchange young West Australians $36m in retirement savings this year.

“The sooner you get super, the more it’ll look after you. Missing out on super before 18 can cost some young people $11,000 by retirement,” she said.

“Equal opportunity shouldn’t wait until you turn 18. Let’s give young workers a better future and pay super to all under-18s.”

A survey from market researcher Pyxis found 73 per cent of Australians supported changing the law so workers get paid super at all ages. Only 7 per cent do not support the change.

A report from the council in December found scrapping the under-18s carve out would also help close the gender super gap.

While teenage girls make up 55 per cent of all under-18 workers, they are only 35 per cent of the teenage workforce who are guaranteed super due to the 30-hour rule.

Teenage girls are more likely to work in retail and community service jobs and typically work fewer hours than the 30-hour threshold.

In contrast, teenage boys are more likely to work as tradies and labourers, where full-time hours and apprenticeships are common, giving them guaranteed super.

Scrapping the rule could mean half a million more young Australian workers would start their working lives being paid super from their first day, analysis by the council found.

This means a typical teenage girl could have nearly $2500 more in her super by the time she turned 18, which could grow into $11,000 more by retirement with investment returns.