Women focus needed in retirement review

The Retirement Income Review needs to focus on women as the gender gap imbalance is for long-standing and well-documented reasons, according to KPMG.

In a submission to the review, the firm said the main issues caused by the gender gap was less continuity in women’s careers and fewer hours worked, often less pay for equal work, and not getting the promotions that men are more likely to obtain.

KPMG head of asset and wealth management, Linda Elkins, said: “If we could draw up the retirement system with a blank sheet of paper, no doubt we would include provisions that redress the unequal contribution that women make to society through caring for other generations.

“But sadly the current system does the opposite – while it was not designed to discriminate against women, in effect all it does is exacerbate the inequality. Specifically, through superannuation concessions, it amplifies the imbalance in earnings between men and women.”

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As a start, she said, changes affecting the three pillars of the country’s retirement income system needed to be addressed – reducing the impact of the Age Pension (pillar one) by implementing amendments to increase/incentivise an increase in contributions (pillar two), and the voluntary superannuation (pillar three).

To start the process of getting more equality of outcome into the system we suggest changes affecting the three pillars of Australia’s retirement income system – they are targeted at reducing the impact on the Age pension (Pillar 1) by implementing amendments to increase/incentivise an increase to contributions (Super Guarantee Pillar 2) and the voluntary superannuation (Pillar 3).

In its submission, KPMG proposed:

• Removing the $450 per month wage threshold;
• Requiring the superannuation guarantee to be paid on paid parental leave and applying it to workers’ compensation payments;
• Changing the contributions to top-up payments, rather than co-contributions;
• Providing super contributions for those 50 to 59 receiving rental assistance;
• Amending the Sex Discrimination Act to ensure employers who paid additional amounts to those who had taken on additional burdens of primary care were not in breach of the act; and
• Amending the concession caps for primary care and care-based work breaks and replace the current contribution cap system with lifetime concessional contribution caps.

“Our economists estimated that a halving of the gap between male and female participation would see the country’s GDP would benefit by $60 billion over 20 years, while cumulative living standards would be raised by up to $140 billion,” she said.

“That must be the real goal of Australia as a country. But from a retirement perspective, we believe the proposals outlined here would do much to combat the inequality women face in later life.”