Extend the Superannuation Guarantee to all Under 18s

Author:  Pierre-Louis Rossi | Publish date: 28/07/2025

Problem Identification: 

In Australia, employees under 18 (U-18) working fewer than 30 hours a week for an employer are not entitled to employer superannuation contributions.

Section 28 of the Superannuation Guarantee (Administration) Act 1992 (Cth) (SGAA) excludes ‘salary or wages paid to a part-time employee who is under 18’ from counting towards guaranteed employer superannuation contribution. 

This means that most U-18 workers do not receive superannuation contributions. According to the Super Members Council of Australia (SMC), this means U-18 workers often miss out on the long-term benefits of compounding superannuation returns. The SMC have also argued that the current system adds administrative complexity for employers, who must track age and hours worked rather than apply a single rule for all employees.

Context: 

Superannuation, or super, refers to a compulsory employer contribution paid on top of a worker’s wages into their nominated pension fund. Employer superannuation contributions were made compulsory for most employees in 1992 with the SGAA. 

Super balances grow through compound interest, where returns are reinvested and generate further returns over time. It is known that the earlier the workers invest in their super, the greater the benefit they receive from compounding over their working life.

The SGAA defines a ‘part-time employee’ as ‘a person who is employed to work not more than 30 hours per week.’ Casual employees often fall into this category.

The SMC has reported that over half of U-18 workers have ongoing employment throughout the year. Further, according to the SMC, 93% of U-18 employees work under 30 hours per week and are therefore not automatically eligible for superannuation on their working hours. The Shop, Distributive and Allied Employees Association (SDA) has reported 55% of young workers were unaware that they were not automatically eligible for superannuation contributions.

According to the SMC, 505,000 U-18 workers will not receive super contributions in 2025. They have calculated that these workers are denied a total of $368 million in superannuation each year as a cohort, or an average of $2,200 per individual over 2 years if working from ages 16 to 18. With compound interest, this amount will have grown to over $10,000 by the time they retire at 67. 

Industry Super Australia has stated that the current framework requires employers to monitor weekly hours worked for all U-18 workers. They have argued that reforming the SGAA would remove ‘administrative burden for employers.’ 

The SMC has argued that ‘age discrimination’ that precludes U-18s from early super contributions was embedded in the introduction of compulsory super in 1992. This is because ‘the super guarantee rate started at just 3 per cent of people’s wages, [leading to] genuine concerns that fees and insurance would erode small super balances.’ Given that U-18s typically earn less and work irregular hours, the potential erosion of their smaller balances was part of the reasoning behind their original exclusion.

However, according to the SMC, this original concern is no longer valid. According to the Australian Taxation Office, the super guarantee rate will reach 12% in July 2025. Further, according to the Australian Prudential Regulation Authority, fee caps of no more than 3% have been introduced for super balances under $6,000. This means that for small account-holders, account fees have been capped and costs borne by the member are restricted to no more than 3% of their total balance. The SMC has argued that these protections render the U-18 exclusion ‘outdated’. 

The SMC has recommended removing the U-18 exclusion from the SGAA. Rest Super, one of Australia’s largest super funds, has also made this reform its first recommendation for their 2025/26 pre-budget submission. Both organisations have argued that this change would increase equity in the super system and improve retirement outcomes. The SMC has further argued that it could improve financial literacy outcomes among young people, reduce administrative burdens for businesses and help decrease reliance on the old-age pension, thereby reducing long-term pressure on the Federal budget. 

There is domestic precedent for removing exclusions to the super guarantee. The Treasury Laws Amendment (Enhancing Superannuation Outcomes For Australians and Helping Australian Businesses Invest) Bill 2021 (Cth) amended the SGAA to remove a condition that stipulated a worker needed to earn over $450 a month to be eligible for guaranteed super contributions. The explanatory memorandum noted that the $450 threshold was outdated due to reforms like fee caps and stronger protections for small accounts. The SMC have claimed that the same logic applies to U-18 workers today.

Solution Identification: 

Repeal section 28 of the Superannuation Guarantee (Administration) Act 1992 (Cth) to make U-18s working fewer than 30 hours a week for an employer entitled to receive superannuation for paid work.

This could allow all U-18 workers to earn superannuation for their paid work, increasing equity and simplifying compliance for businesses.

Advice:

The Assistant Treasurer should move to repeal section 28 of the Superannuation Guarantee (Administration) Act 1992 (Cth) at the next available opportunity. 

Download the 1-Page Brief Here - Extend the Superannuation Guarantee to all Under 18s .pdf

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Public Support: 

1. Super Members Council

2. Rest Super

3. Industry Super Australia

4. Shop, Distributive and Allied Employees Association

Where to go to learn more: 

1. Super Members Council Guaranteeing a Super Start to Work report (2024) - The core policy foundation for this brief. Outlined the financial impact of the under-18 exclusion and proposed its removal. View the report here.

2. Rest Super 2025/26 Pre-Budget Submission - Recommended removing the under-18 threshold as its first policy proposal. Read the submission here.

3. Industry Super Australia Super Start to Work report - Described the under-18 exclusion as outdated and called for its repeal. Read the report here.

4. Shop, Distributive and Allied Employees Association Super on Every Dollar Campaign - Campaign advocating for superannuation to apply to all under-18 workers. View here.

5. Treasury Laws Amendment (Enhancing Superannuation Outcomes for Australians and Helping Australian Businesses Invest) Act 2021 (Cth) - Removed the $450-per-month super threshold. Read the amendment here.

6. Treasury Laws Amendment (Protecting Your Superannuation Package) Bill 2018 (Cth) - Introduced fee caps for low-balance accounts. Read the amendment here.

7. Treasury Laws Amendment (Putting Members’ Interests First) Bill 2019 (Cth) - Reformed insurance and balance protections in superannuation. Read the amendment here.

8. Superannuation Guarantee (Administration) Act 1992 (Cth) - The Act this brief proposes to amend. Section 28 excludes salary or wages paid to part-time U-18 employees from being counted when calculating superannuation contributions. Read the full Act here.

Human Perspective: Joshua is a 17-year-old high-school student who has worked 12 hours a week for over a year at his local supermarket to save for university. Although he shows up every weekend, works hard and earns a regular wage like his older colleagues, his employer is not required to pay superannuation because he works fewer than 30 hours a week. As a result, Joshua has missed out on contributions that could have grown significantly by the time he retires, had they been made available from the start of his working life. Without knowing it, Joshua has been left behind by a system that treats his work as less valuable simply because of his age and roster. To protect the anonymity of those involved, this is a fictionalised account drawn from an amalgamation of real-life stories, experiences, and testimonials gathered during the research process for this brief. Any resemblance to actual individuals is purely coincidental.

Conflict of interest/acknowledgment statement: 

N/a

Support 

If your organisation would like to add your support to this paper or suggest amendments, please email Info@foreaustralia.com. 

Reference list: 

Australian Prudential Regulation Authority (APRA). (2025). Protecting your super package - frequently asked questions. https://www.apra.gov.au/protecting-your-super-package-frequently-asked-questions 

Australian Retirement Trust. (2025, July 1). When did superannuation start in Australia? https://www.australianretirementtrust.com.au/learn/superannuation/superannuation-history-australia 

Australian Taxation Office. (2025, June 5). The final SG rate increase is coming on 1 July. https://www.ato.gov.au/businesses-and-organisations/small-business-newsroom/the-final-sg-rate-increase-is-coming-on-1-july 

Fair Work Ombudsman. (2025). Tax and superannuation. Australian Government. https://www.fairwork.gov.au/pay-and-wages/tax-and-superannuation 

Industry Super Australia. (2023). Super Start to Work: Extending the Super Guarantee to all under-18-year-olds. https://apo.org.au/sites/default/files/resource-files/2023-07/apo-nid323461.pdf 

Rest Super. (2025, January). 2025-26 Pre-Budget Submission. https://rest.com.au/getmedia/1f8dc12e-af65-46e9-9087-4f3d6ad570a5/rest-2025-26-pre-budget-submission.pdf 

Shop, Distributive & Allied Employees’ Association (SDA). (2025). Super on Every Dollar. https://www.sda.au/campaigns/super-on-every-dollar/ 

Superannuation Guarantee (Administration) Act 1992 (Cth). https://www.legislation.gov.au/C2004A04402/latest/text 

Super Members Council. (2024, November). Guaranteeing a Super Start to Work: Paying Super Guarantee to all workers under 18 years of age. https://smcaustralia.com/app/uploads/2024/11/SMC-report-Guaranteeing-a-super-start-to-work.pdf 

Taylor, K. (2020, February). The problem with junior pay rates, explained. The McKell Institute. https://mckellinstitute.org.au/research/articles/the-problem-with-junior-pay-rates-explained/ 

Treasury Laws Amendment (Enhancing Superannuation Outcomes For Australians and Helping Australian Businesses Invest) Bill 2021 (Cth). https://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/Bills_Search_Results/Result?bId=r6800 

Treasury Laws Amendment (Protecting Your Superannuation Package) Bill 2018 (Cth). https://www.aph.gov.au/Parliamentary_Business/Bills_LEGislation/Bills_Search_Results/Result?bId=r6141 

Treasury Laws Amendment (Putting Members’ Interests First) Bill 2019 (Cth). https://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/Bills_Search_Results/Result?bId=r6331 

UniSuper. (2024, July 11). The benefits of compound returns. https://www.unisuper.com.au/articles/2024/07/the-benefits-of-compound-returns