Who’s missing out on super? Wage threshold creates an underclass of biggest losers

Men and women working in sales, community and personal service roles and earning less than $450 per month are the biggest losers when it comes to missing out on the compulsory super contributions paid to most workers.

There are also substantial numbers affected among the nation’s male labourers as well as females working in clerical and administrative roles.

An estimated 220,000 Australian women and 145,000 Australian men are missing out on around $125 million of superannuation contributions each year due to an antiquated wage threshold.

These are the workers earning less than $450 a month and therefore falling under the current wage threshold for the Superannuation Guarantee (SG).

The SG is 9.5 per cent of an individual’s salary that an employer must, by law, pay into the person’s super fund. The SG is a work-related entitlement but under current law, it is denied to workers earning under the threshold.

This includes: 50,000 male retail workers; 32,000 labourers; 26,000 men working in aged care and other community service roles; and 8,000 male clerical workers.

The majority of women missing out on SG includes: 85,000 working in retail; 57,000 working in aged care and child care; and, 28,000 working in clerical roles.

There is widespread support for abolition of the threshold, including from super industry groups, women’s groups, Indigenous groups, researchers, unions and both sides of politics.

A recent Senate economics committee inquiry into super non-payment recommended its removal.

Young people and others working multiple, casual jobs are also losing out, even if their combined income from all jobs is above $450 a month.

It is not unusual for casual workers in low-paying industries like security, contract cleaning, call-centres, child care, the horticultural industry and food processing to hold down two or three jobs.

Many individuals working casual shifts in aged care, hospitality and retail will have two, three or more employers in a month.

The threshold applies to each employer separately and overtime doesn’t count towards the threshold.

The Association of Superannuation Funds of Australia (ASFA) CEO Dr Martin Fahy said the removal of the $450 threshold would help many Australians who were struggling to build wealth for their retirement. 

“Every worker deserves to enjoy the winning benefits of compound interest on compulsory retirement savings through super,” he said.

“The threshold is just holding back long term savings for low paid people and depriving them of a better post-work life.”

Examples of workers not receiving SG under the threshold:
A 19-year-old student, who works part time in the hospitality industry for four years and earns $4,500 a year loses $1,710 in super contributions.

A 25 year old who works a second job as a hairdresser and earns $5,000 a year loses $2,375 in SG payments over five years.

A 35 year old who works part time due to family responsibilities doing bookwork for a local business and earns $4,500 a year is missing out on $2,138 in super contributions over five years.  

A 30 year old working two casual labouring jobs and earning $5,000 a year from both, loses $2,850 in super over three years.

For further information, please contact:
Teresa Mullan, Media Manager, 0451 949 300.

About ASFA
ASFA is the peak policy, research and advocacy body for Australia’s superannuation industry. It is a not-for-profit, sector-neutral and non-party political, national organisation. ASFA’s mission is to continuously improve the superannuation system so people can live in retirement with increasing prosperity.