Pension and tax overhaul needed to close gender gap

Besides a superannuation guarantee (SG) increase, the industry needs to implement pension carers credits and overhaul the tax concessions system if it wants to help close the gender retirement gap.

Speaking at the Mercer Global Pension Index launch, Cbus Super group executive and chair of the Women in Super (WIS) policy committee, Robbie Campo, welcomed the focus of this year’s index on the gender retirement gap.

“As the report notes, it is a global problem that does exist across all jurisdictions and is intrinsically linked to the general statistics around economic participation and equity for women,” Campo said.

Comparing 43 global pension systems encompassing about two thirds of the world’s population, the study gave Australia’s retirement income system a B+ rating, meaning it had many positive features but had room for improvement in areas such as the gender gap.

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Commenting on the study, Campo said it highlighted a systemic issue, not one that could be solved by individual people.

“There are things we can do in terms of improving engagement and understanding but it is really deeply connected with economic capacity more broadly,” she said.

After removing major and well-known factors, such as there being more female part-time workers and more females who had periods out of the workforce due to primary care responsibilities, the study found that pension design flaws were still aggravating the issue.

“There are certainly levers in our system which can assist, so there are levers that are actually exacerbating the problem, even once you isolate all of those broader factors,” Campo said.

She said WIS supported mandatory super on parental leave which was one of the major factors exacerbating the gender gap highlighted in the report.

Campo also agreed with sticking to the SG increase and reforming the tax concession system as about seven in 10 tax concessions were paid to men, according to the Australia Institute.

“The structure of concessions would not appear to be well targeted having regard to improving retirement outcomes,” she said.

“So, it does produce further inequality in terms of gender outcomes, but it's also economically inefficient really to have such a skew towards those who already have… an adequate level of retirement income.”

According to Campo, WIS would increasingly focus on pension carers credits whereby women who are forced to stop working to care for their family members would be given superannuation payments.

“Women will continue to bear the brunt of caring responsibilities and so given that those other broader levers are going to be slow to move, we need to do something more immediately to fix the balance,” Campo said.

“One of the observations in the report which really stuck with me, which after noting all of these factors and some of the solutions around the gender retirement g