The $450 super threshold and what it means for you

School doesn’t teach us much about superannuation, so you’d be forgiven for reaching your mid-20s (or older) and not knowing much about how it works. 

What we mostly take for granted is that it’ll kick in when we start working. While that’s true for most of us, some people are left out through no fault of their own. Why? 

Ever heard of the $450 super threshold? 

This guy’s the culprit – and we’ll tell you why. 

What is the $450 super threshold? 

It’s a little-known super rule that means workers must earn at least $450 a month before super is paid to them. Not only that, the $450 must come from a single employer. This is where a lot of people who work multiple low-income jobs lose out. While their overall earnings meet the threshold, their single-employer earnings don’t. 

(If you’re a curious soul, here’s how your super is calculated based on your ordinary time earnings. It’s not paid on overtime unless your employer has a generous super policy.) 

While it’s your employer’s responsibility to work out if you qualify for super, knowing about the threshold can help you spot if you should have been paid super and weren’t, or help you work out if you’re going to need to play a bigger role in growing your own super. 

(It can also help you demo your impressive financial knowledge to your mates if they can’t work out why their super’s stuck despite the hours they’re putting in stocking shelves on the weekend.)  

Who does it affect and why should you care?  

This primarily affects low-income earners and those working in the gig economy, such as food delivery drivers. Do the maths, and you’ll realise how significantly this could affect you in the long term. For example:  

A casual employee on minimum wage who works 18 hours a month would receive around $500 in super a year. 

But if you worked just a few hours less, you’d receive nothing. 

Missing out on super contributions adds up over the years and it’s the difference between having to survive on the Age Pension and being able to enjoy a more comfortable lifestyle in your golden years.  

What should you do if you’re affected? 

If you’re in a short-term job and not earning super, this probably isn’t the end of the world. But if this is a long-term prospect for you, it’s worth considering your options. 

If you can afford to, contributing to super yourself on a regular basis can go a long way towards building a healthy balance for retirement. 

Our website explains the ways you can grow your super after tax.
Voluntary non-concessional contributions and the government Super Co-contribution may be best suited to low income earners affected by the $450 threshold. 

Need our help? We can advise you on the most effective ways to add more to your super – and you won’t pay any extra for this service. To take advantage of this membership bonus, call or email us on 1300 360 988 or mail@firstsuper.com.au.  

A little extra…  

Did you know Women in Super and AIST have ongoing campaigns to convince the Government to remove the $450 super threshold? If this topic interests you, why not read what they have to say?