Retirement
Parliamentary support heralds a fairer superannuation system for under-18s
Retirement
Parliamentary support heralds a fairer superannuation system for under-18s
In a significant development for Australia's superannuation landscape, Rest, one of the nation's largest profit-to-member super funds, has praised the recent cross-parliamentary support for extending superannuation contributions to workers under the age of 18. The Senate Economics Legislation Committee's majority report, released today by Government and Coalition Senators, endorses the idea of paying super on every dollar earned, including for under-18 workers, regardless of their weekly hours.
Parliamentary support heralds a fairer superannuation system for under-18s
In a significant development for Australia's superannuation landscape, Rest, one of the nation's largest profit-to-member super funds, has praised the recent cross-parliamentary support for extending superannuation contributions to workers under the age of 18. The Senate Economics Legislation Committee's majority report, released today by Government and Coalition Senators, endorses the idea of paying super on every dollar earned, including for under-18 workers, regardless of their weekly hours.
The current superannuation system mandates that workers under 18 must work over 30 hours a week to qualify for compulsory employer contributions. However, Rest's General Manager of Public Policy & Advocacy, Enrico Burgio, believes it's time for this outdated requirement to change. "Because of an outdated requirement to work 30 hours per week, most under-18 workers are missing out on compulsory super contributions. It’s time for this to change," he stated.
The support for this change is not limited to the Government and Coalition Senators. The Australian Greens, in their Dissenting Report, have also backed the initiative, urging for immediate implementation. This broad political backing marks a pivotal moment, as noted by Mr Burgio, who is calling on the Government and Parliament to capitalise on the momentum and commit to making this change a reality. "We wholeheartedly welcome this strong cross-parliamentary support for paying superannuation on every dollar earned and extending the Superannuation Guarantee to all under-18 workers. We urge the Government to now outline a plan to implement this change," Burgio emphasised.
Rest has been a long-time advocate for this reform. In its Pre-Budget Submission to Treasury earlier this year, the fund highlighted this change as a priority recommendation. The fund's analysis suggests that eliminating the 30-hour requirement could significantly boost the retirement savings of young workers. According to Rest, a typical 15-year-old member could see an estimated increase of $3,400 in super by their 18th birthday and an additional $18,100 by retirement, in today's dollars. The benefits extend to 16 and 17-year-old members as well, indicating a meaningful uplift in their super balances.
"This rule is getting in the way of our young Rest members building a fairer and more equitable retirement. Our analysis has shown that scrapping the rule could add thousands to their retirement balances," Burgio noted. The potential for increased retirement savings is a compelling argument for the proposed reform, which aligns with the broader goal of ensuring financial security for all Australians.
While the proposed changes have garnered widespread support, there is recognition of the need for careful implementation. Burgio stressed the importance of considering the impact on employers and suggested a phased approach. "It’s important the potential impact on employers is thoroughly considered and the change is implemented through a multi-year, staged rollout. We agree that the change will require careful consultation," he remarked.
Currently, some employers voluntarily provide super contributions to under-18 workers, despite the absence of a legal requirement. This indicates a growing recognition of the importance of early superannuation contributions in building long-term financial security. The proposed legislative change would ensure that all young workers receive these benefits, levelling the playing field and promoting a fairer superannuation system.
As the discussion around superannuation reform continues, the cross-party support for extending super contributions to under-18s represents a significant step forward. The potential benefits for young workers are substantial, and the momentum generated by this bipartisan backing could pave the way for a more inclusive and equitable superannuation system in Australia.
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