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HESTA: Threshold removal makes super fairer

Monday 14th February, 2022

New legislation to scrap the monthly superannuation threshold is an important step in improving financial security for women, according to health industry super fund HESTA.

From Friday 1 July 2022, employers must pay Super Guarantee contributions on all levels of earnings – currently they do not have to do so if an employee's wages are below $450 per month.

The monthly threshold had to be achieved with one employer, which had unfairly disadvantaged the retirement savings of low-paid casual and part-time workers for years, HESTA CEO Debby Blakey said.

"The requirement to earn $450 per month with one employer before you get paid super has compounded financial insecurity for casual and part-time workers, who often have lower pay and are in insecure or precarious work," she said.

"More than 80 percent of our members are women. Women are more likely to work in multiple part-time or casual roles with different employers. The result is that they can totally miss out on the benefits of super, which leaves them more vulnerable to poverty as they age."

The legislation to end the threshold was announced in the May 2021 budget, but delays meant it took another nine months to be passed in Parliament – causing concern it would not become law before the 2022 Federal election.

Ms Blakey congratulated the Government for ending a super system inequity that disproportionately impacted women, with HESTA – which has more than 900,000 members – having advocated "for many years" to scrap the $450 threshold.

It affects an estimated 300,000 workers in Australia, around two-thirds of which are female.

Employers must contribute 10 percent of a worker's wages, rising from 9.5 percent in July 2021, and the superannuation guarantee will increase to 12 percent by 2025-26.

"Super is for all Australians, and ending this outdated measure helps make our super system fairer for women and those on lower wages," Ms Blakey said.

"Our members spend their working lives caring for others, and the long overdue removal of this threshold will ensure they've now got a better opportunity to enjoy a more financially secure retirement.

"The fact that super continues not to be paid on parental leave remains an obvious gap in our super system that needs to be addressed."

HESTA is APHA's Diamond sponsor.