Super on Every Dollar

To get super, under 18s need to work at least 30 hours a week. This means they sometimes get it and sometimes don’t, and the process associated with the inconsistency sets them up for lack of engagement and distrust of superannuation. Qualitative and quantitative research to understand the views of workers aged 16 to 35 years generally, tells us some things about their super.

1. 50% of workers 16-35 years old think the super guarantee should increase (external survey).2. 16-35 years olds are unaware of the inequity built into the superannuation guaranteed.

• In an external survey, 55% of young workers thought all under 18s got super.
• In externally run focus groups, participants were initially unaware of the gender super gap.

3. Once aware, workers are “infuriated” and want the discrimination fixed.

• In the focus groups, the super gender pay gap elicited a great sense of injustice.  “Terrified and infuriated! As a woman I find that concerning myself and just generally I’m aware that middle age women are the most in trouble financially… so seeing that makes me feel like it’s just hopeless.”
• In an SDA survey, members under 18 told the SDA: “I work just as hard as everyone else and am not getting the same benefits put towards my retirement. I can’t always work 30 hours per week as I have school. I don’t think that should mean I don’t get to start preparing for my future with a superannuation fund. I think we all should get paid equally to what age we are.”

4. Young workers are concerned about their future and expect Government to look after their super.

• In the survey, super was linked to financial security in retirement. Their most reliable sources for information was their fund, their friends/family and their union.
• In the focus groups, one member said: I feel like I’m relatively young, like I’m 20… I literally have no idea about super or where my super is going, or how much super I’m getting and I really need to start to learn about it because it’s so important.
• Another, being unreceptive to a cynical tone about government’s role in super said: I think it’s good because, I would have no idea what to do with it… Somebody with more knowledge can hold onto it for me until I’m ready.”

5. This is perceived by young workers as cumulative harm, especially for young women.

In the focus groups, and in response to the size and growth of the gender gap, members advocated for increased awareness around short- and long-term strategies to minimise the gap, e.g. “If there’s a payment from the government, like child support, maybe there could be a super payment added to that.” For young women, non-payment of super for under 18s adds to the issue of other super exceptions, gender pay gaps, inconsistent hours and periods of leave that reduce women’s retirement outcomes.

Why is this the case?

It’s a relic. In the 1990s, administration of cheques was costly, and the focus of economists was on existing full timers, rather than savings for retirement following a lifetime of insecure work. In 1992, the guaranteed super contribution rate was 3% and the retail minimum wage was approximately $8.50 p/hr. If you were doing 38 hours p/week and were an adult earner, that’s a quarterly cheque into your REST account for about $125.

Now apply junior rates to those 1992 wages. Take the 50% casual rate – approximately $5.30 p/hr – and then apply the minimum weekly engagement of 3 hours work for total earnings of about $15.90 p/week. 3% super on that (48 cents p/week) would have seen a quarterly cheque of $6.20 – the fee for a cheque and administrative charges would take a huge portion of this. It is not surprising juniors were exempted back then but things have changed.

The 3% Super of 1992 is now approaching 12% and cheque fees are a thing of the past. The 16-year-old casual today on junior rates of 50% is on $15.45 p/hour and 3 hours p/week would see a quarterly super EFT payment of $69.31.

A more common working junior profile today is a 17-year-old doing 3 shifts per week which is 9 hours on $18.55 with 11.5% super – this would be an EFT quarterly payment of $249.60.