An AMP analysis has found that women starting a family were the biggest recipients of the government’s low-income super tax offset (LISTO), which paid up to $500 per year to help low-income earners save for retirement.
According to the 174,000 customers’ data over a four-year period, there was a significant jump in the number of women receiving the LISTO between the ages of 25 and 33, of which 15% received the LISTO.
Also, women aged 18 to 54 were twice as likely to receive the LISTO than men. By comparison, the peak time men were eligible for the low-income super tax was age 19, AMP said.
AMP’s technical strategy manager, John Perri, stressed that women retired with less super than men due to a number of factors, including the fact that they were more likely to take time out of the workforce to care for children and they were often returning to part-time lower paid roles.
“Although the low-income tax offset is a small amount, every little bit counts when it comes to increasing your superannuation balance. Super is built on compounding interest, so the more you contribute at an early age, the more likely your balance will grow over time, subject to market fluctuations,” he said.
Perri also said that it was interesting to see Generation Z also benefitting from the low-income tax offset.
“These Australians have time on their side when it comes to saving into super. A $500 tax offset today could be worth significantly more when you consider the impact of compounding interest over the next four or five decades.”
LISTO was designed as a payment to help people earning under $37,000 or less save into super, with concessional (before tax) super contributions being taxed by the government at 15%.