Superannuation for Teenagers in Australia

What Is Superannuation?

Super is a way of saving for when you retire. Instead of spending all your money now, a portion gets put into a special savings account that you can't touch until you're much older (usually around 60). The idea is that by the time you retire, you'll have built up enough money to live on.

The important thing to understand is that super is paid by your employer, not taken from your wages. If you earn $100 in a shift, you get $100 in your bank account. Your employer pays an extra $11.50 on top of that into your super fund. It's essentially bonus money you don't see until retirement.

Your super gets invested over decades, so even small amounts now can grow significantly thanks to compound interest. A few hundred dollars earned at 15 could turn into thousands by the time you're 60.

Do You Get Super as a Teenager?

This is where it gets tricky. The rules are different depending on your age and how many hours you work.

If you're under 18, your employer only has to pay you super if you work more than 30 hours in a week. For most teenagers with casual after-school or weekend jobs, this means you probably won't be getting super. A typical shift pattern of 8-15 hours per week won't qualify.

However, some employers choose to pay super for all employees regardless of age or hours. It's worth checking with your employer when you start.

Once you turn 18, the 30-hour rule no longer applies. You'll get super on all your earnings, even if you only work a few hours per week. The only remaining threshold is earning at least $450 in a calendar month, though this threshold is being phased out.

How Much Super Will You Get?

The current super rate is 11.5% of your ordinary earnings (for the 2024-25 financial year). This rate is set by the government and increases gradually over time. Here's what that looks like in practice:

Remember, this is money your employer pays on top of your regular wages. You don't see it in your bank account, but it's still yours. The super rate is scheduled to increase to 12% by 2025-26.

Why This Matters

You might think that a few dollars of super each week doesn't matter when retirement is 45+ years away. But here's the thing: money invested now has more time to grow than money invested later. This is called compound interest.

Let's say you put $1,000 into super at age 16 and it earns 7% per year on average. By the time you're 65, that $1,000 would have grown to around $29,500. The same $1,000 put in at age 35 would only grow to about $7,600 by age 65. The earlier you start, the more powerful compounding becomes.

This is also why it's worth checking that your employer is actually paying your super if you're entitled to it. Some employers don't pay on time or don't pay at all, which is illegal. You can check your super through myGov.

How to Check Your Super

The easiest way to check your super is through your myGov account linked to the Australian Taxation Office (ATO). Here's how:

1. Go to my.gov.au and sign in (or create an account if you don't have one)
2. Link your myGov account to the ATO if you haven't already. You'll need your TFN (Tax File Number) to do this.
3. Once linked, go to the ATO section and look for "Super" in the menu
4. You'll see a list of all your super accounts and recent contributions
5. Check that your employer's contributions are showing up. Note that employers have until 28 days after the end of each quarter to pay, so contributions might not appear immediately.

If you've been working for a few months and no super is showing up (and you're entitled to it based on your age and hours), you can report your employer to the ATO. They take unpaid super seriously.

Choosing a Super Fund

When you start a new job, you can choose which super fund you want your employer to pay into. If you don't choose one, they'll use their default fund (often called a "stapled fund" if you've had super before, or their workplace default if you haven't).

The most important thing to look for as a young worker is low fees. Because your balance is small, high fees can eat into your savings proportionally more than they would for someone with a larger balance. Look for funds that charge less than 1% in total fees.

You can compare super funds using the ATO's YourSuper comparison tool. This shows fees and investment returns for different funds.

Some popular super funds for young Australians include Australian Super, Hostplus, and Rest Super. All have competitive fees and good track records. But any low-fee fund is a reasonable choice at this stage.

What If You Have Multiple Super Accounts?

If you've had multiple jobs, you might have ended up with multiple super accounts. This happens when each employer pays into a different fund. The problem with multiple accounts is that you pay multiple sets of fees, which eats into your savings.

You can consolidate (combine) your super accounts through myGov. Here's how:

1. Log into myGov and go to the ATO section
2. Go to "Super" and then "Manage"
3. Select "Transfer super"
4. Choose which accounts you want to consolidate into one fund
5. Confirm the transfer

Before consolidating, check that you won't lose any insurance attached to your super accounts. Some funds include basic life or disability insurance. For most teenagers, this isn't relevant, but it's worth checking.

Getting Started Checklist

Here's what you should do regarding super when you start a new job:

• 1.Get your TFN - You'll need it to set up myGov and check your super. Apply at ato.gov.au.
• 2.Set up myGov - Create an account at my.gov.au and link it to the ATO so you can track your super.
• 3.Check if you qualify - If you're under 18, work out whether you'll be working more than 30 hours per week.
• 4.Choose a super fund (optional) - If you want to choose your own fund, research low-fee options and give your employer a "Choice of Super Fund" form.
• 5.Check your super after a few months - Log into myGov and verify that contributions are appearing. Report any issues to the ATO.
• 6.Consolidate if needed - If you end up with multiple super accounts from different jobs, combine them to save on fees.