Women losing out on retirement system

Removing the $450 monthly income threshold for exemptions on compulsory super contributions would help address gender disparities in Australian's retirement incomes, according to the Australian Institute of Superannuation Trustees (AIST).

The industry body has released a report highlighting the fact that the average woman retires with less than half the super of her male counterparts.

Although the impact of removing the threshold was small according to modelling, AIST said the effect would be concentrated and lead to significant improvements for those already disadvantaged by the current exemption.

Women comprised over 67 per cent of the part-time workforce and had almost the same number of full-time and part-time workers, according to AIST, while Australia ranked fifth in the OECD for women working in part-time work at 38.5 per cent.

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In female-dominated areas where working for a number of employers was common, many employees were excluded from the Superannuation Guarantee (SG) system — because the threshold only applied to a single employer and did not combine income, it said.

The cost of removing the exemption would be minimal for the Government, while the constraints felt by employers regarding part-time workers and the SG would be lessened with the back-office and administration improvements coming out of SuperStream reforms, it said.

The Government-funded parental leave scheme should include a super component linked to SG payments on weekly earnings, it said, or a maternity-linked government contribution, while a return-to-work bonus and a baby bonus could also address some of the gender inequalities in the country's retirement savings system, AIST said.

Superannuation tax incentives should target middle-to-low income earners and cater for those who had not had compulsory super contributions for long. The incentives should be based on accrued benefits and not age, AIST said, which could begin to work towards addressing some of the disparities between retirement income for men and women.

While the industry body supported the recent reductions in the concessional contribution cap, it said it would not support further reductions.

A permanent increase to the over-50s concessional contributions cap to $50,000 for those with a super balance below $500,000 would extend tax benefits to those working later in life and accommodate ‘catch-up' contributions — which could help women who had experienced broken periods of employment, AIST said.

The industry body said it was a strong supporter of the Low Income Earners Government Superannuation Contribution, and while it also supported a return to formal co-contribution levels, it understood fiscal capacity did not allow for this currently — and the two needed to be traded off against each other.