The Australian Government’s decision to swiftly legislate paying super on its parental leave scheme will help to tackle gender inequity and boost a mother of two’s retirement savings by about $14,500.
Paying super on the Commonwealth parental leave scheme will benefit around 180,000 Australian mothers each year and narrow the gender super gap, which new analysis shows is about $50,000 for those nearing retirement (see table 1).
Super Members Council CEO Misha Schubert urged Parliament to swiftly pass the Bill, which enables payments to start from July 1 next year.
“This historic reform will make a vast difference to the lives and retirement incomes of generations of Australian women,” Ms Schubert said.
“It will powerfully propel Australia closer towards the goal of ending the financial ‘motherhood penalty’ in the early years of having children – which has a compounding effect across women’s working lives.”
“It’s the next big milestone on the road to retirement gender equity - and we urge the Parliament to pass the Bill swiftly. Australia must continue to make major advances like this to ensure all women can have a financially secure retirement.”
Despite Australian women – on average - living longer than men and retiring sooner, women have about a quarter less super than men as they approach retirement.
New Super Members Council analysis shows the gender super gap dramatically widens when women reach their 30s – this is the decade many women take time out of the paid workforce to raise children. While the gender super gap has narrowed for most ages, women in their 30s are going backwards.
Paying super on parental leave is a highly effective gender equity measure and could reduce the gender gap at retirement by around a quarter. SMC estimates about 94% of the benefits accrue to women, and about 170,000 women received Commonwealth Parental Leave Pay in 2022-23.
Parental leave is one of the only types of paid leave that does not attract super. Now that the Australian Government will pay super on its scheme, it sets an example for more employers to follow.
This is a momentous step towards making super more equitable. The Government should also now move to quickly pass the Objective of Super legislation which was introduced last November.
The Objective of Super legislation – which has cross-party support - will be a guiding light for future super policy development.
SMC also advocates a boost to the Low-Income Super Tax Offset (LISTO) – a super tax refund for low-income workers that mostly benefits women but has not increased in line with tax brackets or rises in the Super Guarantee.
More than 700,000 women would benefit from lifting the LISTO which would cost $500 million a year. If this reform was combined with the super on parental leave, women in the lowest 10 per cent of wage earners would see a 21 per cent boost in their super balance at retirement.
The Super Members Council will continue to advocate to address structural drivers of the gender super gap like lower workforce participation rates, the prohibitive cost of childcare, lower pay for feminised industries and the value placed on unpaid caring.
Table 1: Gender super gap by age and median balances
|
Age |
Men |
Women |
Gender gap ($) |
Gender gap (%) |
|
18-24 |
$4,600 |
$4,300 |
$300 |
7% |
|
25-29 |
$17,500 |
$17,800 |
-$300 |
-2% |
|
30-34 |
$39,800 |
$34,300 |
$5,500 |
14% |
|
35-39 |
$70,200 |
$54,400 |
$15,800 |
23% |
|
40-44 |
$101,200 |
$74,100 |
$27,100 |
27% |
|
45-49 |
$133,600 |
$93,500 |
$40,100 |
30% |
|
50-54 |
$162,100 |
$111,100 |
$51,000 |
31% |
|
55-59 |
$186,300 |
$128,700 |
$57,600 |
31% |
|
60-64 |
$205,400 |
$153,700 |
$51,700 |
25% |
|
18-64* |
$142,500 |
$110,400 |
$32,100 |
23% |
Note: *18-64 age group’s balance and gap figures are based on mean balances.
Source: SMC analysis of the ATO Taxation Statistics, 2021-22.
About us:
The Super Members Council is a non-partisan voice advocating for 11 million Australians with their retirement savings in profit-to-member super funds.
Contact details:
James Dowling: 0429 437 851, jdowling@smcaustralia.com