Super Guarantee $450 threshold creates ‘underclass’ of workers

The minimum earnings threshold to receive Superannuation Guarantee payments creates an ‘underclass’ of workers, says the Association of Superannuation Funds of Australia (ASFA).

ASFA says the “biggest losers” are those men and women working in the sales, community and personal service roles who earn less than $450 per month – the threshold for most workers to receive Super Guarantee payments.

The organisation said there is also substantial numbers of workers affected among Australia’s male labourers and 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,” said ASFA.

Of the 220,000 women, 85,000 work in retail, 57,000 work in aged care and child care and 28,000 are clerical workers.

Of the 145,000 men, 50,000 work in retail, 32,000 are labourers, 26,000 work in aged care and other community service roles and 8,000 are clerical workers.

ASFA says there is “widespread support” for the abolition of the minimum monthly threshold to receive Super Guarantee, including from the superannuation industry, women’s groups, Indigenous groups, researchers and unions.

Related: Minimum Super Guarantee threshold disadvantaging Aboriginal peoples

ASFA also says there is support on both sides of politics for changing the Super Guarantee rules, noting a recent Senate inquiry which recommended removing the $450 threshold.

Because the minimum monthly threshold applies per employer and doesn’t include overtime it can particularly impact young people and others who work multiple jobs.

“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,” said ASFA.

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

ASFA CEO Dr Martin Fahy said removing the $450 monthly threshold for Super Guarantee payments would help many Australians 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.”

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