Lower paid women would have $40,000 more at retirement if at this year’s Budget the Federal Government committed to paying super on Commonwealth parental leave and re-aligning tax offsets, a new report has found.
The Super Members Council (SMC) report, Securing a Dignified Retirement for More Women, provides new insights into the drivers of the gender super gap, highlighting that this Budget presents an opportunity for immediate action to improve outcomes for women while working towards further substantive, long-term structural changes.
And to make super fairer, SMC also urges the government use this Budget to better recognise First Nations and Indigenous kinship structures in super and further boost unpaid super enforcement.
SMC Interim Chair Nicola Roxon said poorly targeted tax concessions, the lack of super on paid parental leave and inequities in both pay and workforce participation rates are all persistent barriers to many women achieving economic security in retirement.
“Super has transformed the lives of millions of Australians, yet for many women, who retire earlier and live longer than men, the system is still falling short.” Ms Roxon said.
Women typically retire with a third less super than men. Bridging this gender super gap will require considered, society-wide change over time. But action on long overdue polices at this Federal Budget would make a meaningful difference to retirement outcomes for women, including:
- Paying super on the Commonwealth Parental Leave Pay scheme could mean a mother of two is $12,500 to $14,500 better off at retirement. This would benefit thousands of working mums each year.
- Increasing the low-income superannuation tax offset (LISTO) so workers earning up to $45,000 receive a full tax refund on their super guarantee (SG) contributions. This change would boost the super of more than 1.2 million Australians – 60 per cent of whom are women.
New SMC cameo modelling shows these measures combined could mean lower paid women retire with $38,000 more, boosting their final retirement balance by between 18% and 21%. (See Table 1)
“Paying super on parental leave and better aligning tax offsets for lower paid workers can be enacted almost immediately and will make a meaningful difference to women at retirement,” Ms Roxon said.
“We need to ensure super tax concessions are directed to those who need it the most.”
The report adds further evidence to the many voices that have come before, including the Women’s Economic Equality Taskforce, to highlight the significant opportunity to improve equity in Australia’s world-class super system.
The Super Members Council Pre-Budget submission – its first since forming out of a merger between Industry Super Australia and the Australian Institute of Superannuation Trustees – also suggests a series of other measures that would improve equity in super and retirement outcomes, including:
- Formally recognising traditional Indigenous kinship arrangements inside super
- Setting unpaid super compliance targets for the ATO
- Paying super to all under-18 workers, not just those who work more than 30 hours a week – this would mean an additional $2,600 in super contributions to the average underage worker.
- Improving data sharing arrangements, so de-identified tax data can better help super funds create more tailored and targeted retirement solutions for members.
And outside super, lifting the childcare subsidy would increase parents’ workforce participation and pay – especially for women – which would, in turn, boost their super balance at retirement.
Table 1: Increase to retirement balance from paying super on Commonwealth Parental Leave Pay (PLP) and increasing the Low-Income Super Tax Offset (LISTO)
|
Income |
LISTO |
LISTO + PLP |
|||||||
|
Dollar value |
Per cent |
Dollar value |
Per cent |
||||||
|
Men |
Women |
Men |
Women |
Men |
Women |
Men |
Women |
||
|
P10 |
$11,135 |
$13,957 |
4% |
11% |
$12,116 |
$26,403 |
5% |
21% |
|
|
P20 |
$4,074 |
$26,351 |
1% |
13% |
$4,956 |
$38,797 |
1% |
18% |
|
|
P30 |
$4,545 |
$12,559 |
1% |
4% |
$5,428 |
$25,005 |
1% |
9% |
|
|
P40 |
$2,261 |
$6,999 |
0% |
2% |
$3,143 |
$19,445 |
1% |
6% |
|
|
P50 |
$0 |
$7,221 |
0% |
2% |
$882 |
$19,667 |
0% |
5% |
|
|
P60 |
$0 |
$8,977 |
0% |
2% |
$882 |
$21,423 |
0% |
4% |
|
|
P70 |
$0 |
$10,567 |
0% |
2% |
$882 |
$23,012 |
0% |
4% |
|
|
P80 |
$0 |
$0 |
0% |
0% |
$843 |
$12,446 |
0% |
1% |
|
|
P90 |
$0 |
$0 |
0% |
0% |
$845 |
$12,338 |
0% |
1% |
|
Source: SMC cameo model.
About us:
The Super Members Council (SMC) is the new collective voice for profit-to-member superannuation funds, representing more than 10 million Australians and their $1.4 trillion in assets. Our primary purpose is to protect and advance the interests of super fund members throughout their lives. SMC advocates on their behalf to ensure superannuation policy is stable, effective, and equitable.
Contact details:
Media contact: James Dowling 0429 437 851, jdowling@smcaustralia.com