Giving employees the option to salary sacrifice into their superannuation will impact an individual’s retirement balance significantly and help reduce the gender gap, according to ANZ.
The bank’s submission into the Senate’s inquiry into the economic security for women in retirement said if the average 30 year old woman could sacrifice five per cent of their salary before tax their super balance at retirement would increase by $178,100. For men, it would be an extra $208,900.
“More importantly, voluntary contributions translate into material improvements in the number of years that retiree will be able to achieve their desired level of income,” the submission said.
“Using the ASFA [Association of Superannuation Funds of Australia] comfortable standard of $42,861, a 30 year old man will be able to sustain his retirement income for an additional seven years, and a 30 year old female for six years.”
The submission said voluntary savings form one of the three pillars of Australia’s retirement income system, and every effort should be made to ensure that people who are engaged with their retirement savings can easily make voluntary contributions into their super.
“This is especially important for women, who often take career breaks to care for children or other family members and need to ‘catch up’ on super contributions at different points during their careers,” it said.
“We acknowledge that salary sacrifice arrangements may not be practical for casual or contingent employment.”
ANZ’s other recommendations included:
- Join superannuation accounts;
- Extending the Low Income Superannuation Contribution past 2017;
- Removing the $450 monthly threshold for super guarantee (SG) contributions;
- Amending the Sex Discrimination Act (1984) to allow employers to pay additional super to female employees;
- Introducing super contributions to government paid parental leave schemes; and
- Accelerate the SG increase to 12 per cent.
“Collectively, these recommendations would narrow the $92,000 superannuation gender gap by 18 per cent to about $75,000 by the time current workforce entrants retire,” the submission said.
“These measures would help reduce the number of Australians on the Age Pension from 74 per cent to 40 per cent, and save the Government $75 billion per year by 2085.”
