The wait may soon be over for Australian women to get not just a much needed boost to their retirement savings but government recognition that this is a problem that needs fixing.
While it’s unlikely to deliver the big fix needed to help equalise the superannuation balances of women, compared to men, expectations are high that Tuesday’s May Budget might actually deliver a handful – a small hand – of long-awaited measures that help address the fact that women tend to retire with 50 per cent less superannuation then men.
The timely release of the Senate Inquiry into women’s economic security in retirement last week, has 19 recommendations which the federal government is taking seriously.
Of those recommendations, there are at least three – yes only three – that industry experts believe are highly likely to be announced.
The Association of Financial Advisers believes the most likely is the re-targeting of the superannuation tax concessions to assist those with lower balances.
“The Treasurer Scott Morrison has already confirmed that there will be changes to tax concessions for higher earners,” said AFA National President Deborah Kent.
“It would make sense to use those savings to assist women with lower super balances to achieve a more comfortable retirement.
“There is also scope within the system to implement other recommendations including paying super guarantee on the paid parental leave scheme, increasing the super guarantee to 12 per cent and making employers pay the super guarantee for employees whose salary or wages are less than $450 a month.”
Pauline Vamos chief executive officer of the Association of Superannuation Funds of Australia (ASFA) also expects similar changes.
“I think we will see the ability, for those in their 40s and with low account balances, under $250,000 to be allowed to put more into their super above the concessional cap.
“The current cap (limit on how much you can put into super via an employer each year) is $30,000, and they may be allowed to put $40,000 into super.
Ms Vamos added that while it’s unlikely the government will announce that superannuation be included in paid parental leave (doh!), she does think there are another two measures that could also help to plug the retirement savings gap once a woman has children.
This includes the proposal to amend the Sex Discrimination Act 1984 to ensure companies are able to make higher superannuation payments for their female employees when they wish to do so.
The other likely recommendation is to remove the exemption in the Superannuation Guarantee (SG) Act from paying the SG for employees whose salary or wages are less than $450 a calendar month.
“The government might well legislate that if a woman does take maternity leave, that the anti-discrimination legislation allows employers to pay a person more super after they have returned to work,” said Ms Vamos.
“The $450 monthly earnings threshold discriminates against women, so we could see the removing of that threshold and we believe that would be a significant benefit to some women.
“There are so many difference situations that apply to women and their superannuation, so no one measure will help everyone. This is why we need to look at different measures to help different cohorts of women,” said Ms Vamos.
In this article
- Women + Money
- AFA National President Deborah Kent
- Association of Financial Advisers
- Bianca Hartge-Hazelman
- Federal Budget
- May Budget
- Pauline Vamos
- personal finance
- Senate Inquiry into women's economic security
- ssociation of Superannuation Funds of Australia
- Treasurer Scott Morrison
- women's super