Women face brunt of lower concessional cap
The detrimental effect of the reduction of the annual concessional contribution cap to $25,000 on women has flown under the radar compared to passionate opposition to other proposed superannuation changes like the retrospective nature of the $500,000 lifetime cap and the $1.6 million cap on pensions assets.
That is the argument from IOOF, which also said removing the higher cap of $35,000 for those aged 50 or more would particularly hurt the ability of women to catch up on savings after irregular employment patterns and lower super contributions while looking after children.
IOOF senior technical services manager, Pam Roberts, said that while the reforms would permit up to four years of unused cap amounts to be brought forward for those with account balances under $500,000, this would only come into effect on 1 July, 2017 and would affect those who would lose the higher concessional contribution rate.
"No one appears to have noticed the elephant in the room... and that she is wearing high heels," Roberts said.
The Household, Income and Labour Dynamics in Australia Survey from 2014 showed the average account balance for females aged around 62 is only 66 per cent of that of males, while the average account balances for females in the pre-retirement situation currently aged around 51 was only 52 per cent of males.
Roberts said that both men and women were trying to improve their retirement savings by contributing more in their 50s and 60s during the "empty nest" years.
"The trends indicate that women, in particular, are trying to improve their situation with a higher rate of increase in their account balances than men of the same age. The Government should be encouraging women to improve their superannuation outcomes when they can. Certainly not act to discourage these savings."
"Reducing the concessional contribution cap for those over age 49 from $35,000 to $25,000 does just that. Let's at least try to close the gender gap and deliver a standard of retirement that women rightly deserve, and have earned."
AUTHOR
Malavika Santhebennur
Recommended for you
ASIC has banned another two former financial advisers of MWL Financial Services of making inappropriate advice to clients regarding the Shield Master fund, following two bannings earlier this month.
Two surveys from CoreData and Vanguard have shared the level of trust the Australian public has in financial advisers, and how it has changed since the Hayne royal commission.
The Financial Advice Association Australia has stated it is “working closely” with the Financial Services Minister, Daniel Mulino, to remount the inquiry into Dixon Advisory by the Senate economics references committee.
Australian wealth manager Shaw and Partners has appointed a national head for its private wealth division, which has over 200 advisers and $40 billion in assets under management.
