To help with the superannuation gap, primary carers should receive a rebate on the 15% superannuation contributions tax (SCT) paid on contributions made for up to five years following the period out of the workforce, according to KPMG.
The paper ‘Options for addressing the gender superannuation gap’ said primary carers tended to be women and would be compensated for super “lost” while at home caring for children.
KPMG said the primary carer rebate would help to equalise pay and super for women who were currently losing out on super contributions after leaving work, which particularly impacted women in lower paid employment.
Alison Kitchen, chair of KPMG Australia, said although there was a range of reasons men and women had unequal super balances at retirement, time out of the workforce was the one of the biggest factors.
“Time spent out of employment is a major contributor to unequal levels of superannuation balances, as women miss out on super contributions in some of their peak working years,” Kitchen said.
“We propose the introduction of a targeted rebate of tax paid on contributions for primary carers as a mechanism to compensate for ‘women’s time out’.
“Without them, women will continue to miss out on vital income during childbearing years that can significantly impact on them later, especially in retirement.”
Linda Elkins, KPMG partner and national sector leader asset and wealth management, said the rebate could help close the gender super gap in a significant way.
“The aim is to support the primary carer in catching up to the extent of a maximum of 50% of the contributions that might reasonably have been made, had they continued to work as they did before leaving the workforce,” Elkins said.
The report highlighted that in the years approaching retirement age, the gender super gap could be anywhere between 22% and 35%.
The report also suggested the creation of a primary carer supplementary concessional cap, providing top-up super for primary carers, and removing the five-year limit on utilisation of concessional caps.