Finance Your Super The $450 monthly super threshold hurts indigenous workers: experts

The $450 monthly super threshold hurts indigenous workers: experts

Indigenous super.
Indigenous workers are more likely to be casual. Photo: Getty
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The gap in financial welfare between indigenous and other Australians is not changing and is actually being accentuated by the $450-per-month threshold for compulsory superannuation payments.

So the Indigenous Superannuation Working Group of the Australian Institute of Superannuation Trustees has joined the call for the threshold to be scrapped.

“The weekly household income for Aboriginal and Torres Strait Islander adults is almost half that of other Australian adults so they are more likely to be affected by the income threshold,” said ISWG Chair Jo Naquesage.

Under the threshold rules, anyone earning less than $450 a month from one employer is not covered by mandatory super guarantee payments. That hits indigenous people hard because of the nature of their employment.

“The nature of indigenous employment is that it’s insecure, unskilled or low skilled and often casual,”  Amanda Young, CEO of the First Nations Foundation, told The New Daily.

“You find indigenous people working in child care where they are on call to different centres with the same company. But they can be all owned by franchisees and each gets the $450 threshold. People can be working full time and still not getting super,” Ms Young said.

Overall indigenous incomes are around half of the community standard. Figures from the 2016 census Aboriginal and Torres Strait Islander Peoples Profile – Australia highlight this disparity, showing 20 per cent of indigenous households having income of $1000 or more compared to 41 per cent of non-indigenous households.

Those figures are up from 13 per cent and 33 per cent respectively in 201. But the gap remains the same and nominal income rises in that time make up for part of the growth.

Interaction of the $450 threshold and the pay gap is hitting indigenous retirement balances. “As a result, many Indigenous people aren’t being paid superannuation from their employer meaning less compound interest is being earned, and ultimately, they are getting less money in retirement,” Ms Naquesage said.


As the table shows indigenous super retirement balances are much lower than the general community with Aboriginal and Torres Strait Islander women most disadvantaged, having retirement balances of only 61 per cent of the average non-indigenous male balance. The lower balances mean that indigenous people have to work a lot longer that non-indigenous people.

To attain the Association of Superannuation Funds of Australia’s ‘comfortable’ standard for retirement retirement ($645,000 for a couple and $545,00 for a single) the average non-Indigenous Australian could retire at 70, compared to the average Indigenous Australian who would have to work until the age of 74.

Indigenous people face many challenges in accessing superannuation including verification of identity, communication and literacy issues, different cultural practices and relationships, and life expectancy differences. “Many Aboriginal people don’t live to 74,” Ms Young said.

“There are still a number of challenges for Aboriginal and Torres Strait Islander peoples in regards to superannuation and retirement outcomes, however removing barriers like the $450 threshold is an important step,” Ms Naquesage said.

Neither the Labor opposition or the Liberal National government have firm policies on the $450 threshold as yet. However a Senate committee chaired by Labor recommended in May that it be scrapped. The inquiry’s Liberal deputy chair, Senator Jane Hume, has also backed the reform.

The threshold was originally introduced to reduce the administrative burden of paying superannuation to casual and part-time employees, however the introduction of new technology to allow employers to send money and information electronically has largely addressed these issues, ISWG says.

“Now that we have SuperStream, the administrative barriers have fallen away so the threshold should be made redundant,” said Ms Naquesage.


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