New research shows that a law in Queensland is treating people under 18 unfairly by not letting them add money to their retirement savings.
This could mean they lose more than $10,000 when they retire. About 87,000 young workers in Queensland are left out of the good retirement system unless they work over 30 hours a week for the same boss.
A recent study by Industry Super Australia (ISA) suggests that this law might lead to a yearly loss of around $90 million in retirement savings for young workers in the state. If these workers could join the retirement savings plan, they might get about $1,035 extra each year. If this money goes into a special savings account, it could become $10,200 by the time they retire.
ISA’s Super Start to Work Report says that 375,000 Australian teen workers are not getting retirement savings because of the 30-hour a week rule. This means they’re missing out on a total of $330 million every year. Besides affecting young workers’ money, this rule also makes it harder for employers to keep track of the hours that workers under 18 are doing. This is tricky because these young workers often work irregular hours and don’t get paid into their retirement savings regularly.
Most workers under 18 don’t get retirement savings most weeks because they work less than 30 hours. That’s more than 90% of teenagers. But many of them have jobs all year round, with 75% of them working for 6-12 months each year.
The rule that excludes under-18s from the retirement savings system started in 1992. It was made to stop small amounts of money from getting eaten up by fees and insurance costs. But nowadays, fees are controlled for small amounts of money, and insurance is not automatically given to people under 25 with less than $6,000.
Getting rid of the 30-hour rule wouldn’t just be fair for young workers; it would also help them start saving for their future earlier. A survey by UMR found that most people (85%) agree that everyone should get retirement savings, no matter how old they are.
Bernie Dean, who runs Industry Super Australia, said, “This old law is not fair to young workers in Queensland when they’re just starting out. Keeping them out of our good retirement savings system is not right. We need to update the law and make sure young workers get the benefits they should. It’s also hard for employers who have to figure out when young workers are working, which can be really complicated when the hours change a lot.”
Costly super law for young workers
A recent report from Industry Super Australia (ISA) has shown a rule that stops workers under 18 from getting extra money for retirement. This rule says young workers have to work at least 30 hours a week for one employer. People don’t like this rule because it’s not fair, and it could mean young workers lose out on money. According to ISA, about 375,000 of Australia’s youngest workers can’t get extra retirement money because of this rule. That’s about $330 million lost each year. If the rule didn’t exist, these young workers could get an extra $885 each year for their retirement savings. Over time, this could add up to $10,200 by the time they retire.
ISA’s Super Start to Work Report says the 30-hour rule is not good for young workers or their bosses. It’s hard for bosses to keep track of the hours young workers do, especially because they often work different hours and don’t get their retirement money regularly.
Most workers under 18 can’t add to their retirement savings because they work less than 30 hours most weeks. More than 90% of teenagers are in this situation. But many of them work for part of the year, with 75% of them having a job for 6-12 months each year.
This rule started in 1992 to help stop small retirement savings from getting used up by fees and insurance. But now, fees are controlled for small amounts of money, and insurance isn’t given automatically to people under 25 with less than $6,000.
Taking away the 30-hour rule wouldn’t just make things fair for young workers; it would also help them start saving for their retirement earlier. A survey by UMR found that most people (85%) agree that everyone should get retirement savings, no matter how old they are.
Bernie Dean, the head of Industry Super Australia, said, “This old law is not fair for young workers in Queensland when they’re just starting their careers. Not letting them join our good retirement savings system is unfair. We need to change the law and make sure young workers get the benefits they should. It’s also hard for bosses who have to figure out when young workers are working, especially when the hours change a lot.”
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