Industry superannuation funds have broadly welcomed the Federal Opposition’s proposed changes to the superannuation regime aimed at closing the gap on women’s retirement earnings.
The Federal Opposition has announced it will:
- Alter the regime to ensure that superannuation is paid on Government Paid Parental Leave and Dad and Partner Pay payments from 1 July 2020;
- Phase out the $450 per month income SG eligibility threshold from 1 July 2020-1 July 2024;
- Amend the Sex Discrimination Act 1984 to ensure businesses can make higher super payments for female employees when they wish to;
- Put in place an annual women’s budget statement for greater transparency and policy impacts understanding;
- Ensure consideration and reporting by Labor’s Council of Superannuation Custodians on the impact on women of future superannuation changes that it recommends to the government.
Commenting on the Labor Party move, Industry Super Australia (ISA) head of consumer advocacy, Sarah Saunders said the pre-election commitments to narrow the gender super gap, such as paying superannuation on parental leave and scrapping the minimum $450 threshold, were a welcome start.
She noted that the super gap appeared at around age 35 when women had children, and steadily widened to around 40 per cent at retirement.
Saunders said the mix of policies announced by the Federal Opposition acknowledged this reality.
“The system is unforgiving of broken work patterns, and yet women still provide the lion’s share of care,” she said. “Once women return to the workforce, catching up on super contributions and lost compound earnings is very difficult.”
“Policy-makers must show bi-partisanship in ensuring the superannuation system is fit for purpose and fair for everyone, and this is a positive start,” Saunders said. “Adding super to paid parental leave and phasing out the $450 monthly threshold are changes that respond to both existing realities and the evolving workforce”.
She said that removing the threshold would ensure that everyone over age 18 who earned a wage, even across multiple job holdings, could build their retirement savings.
ISA has suggested a future Labor Government could go even further and that other policies worth considering include: a tightly-targeted capital top-up for low balance accounts; and aligning the Low Income Superannuation Tax Offset with scheduled (2021) SG rate and second tax threshold increases.