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Double-dip strategy could bridge gender savings gap
A woman's partner should be allowed two dips of the concessional contributions limit while their partner is on maternity leave, Australian accounting and advisory firm William Buck has said.
The suggestion is a response to what head of William Buck's wealth management advisory group, Chris Kennedy, described as the "hugely under-thought and under-discussed area of superannuation" — the gender gap in retirement savings.
Kennedy said there were a number of areas of reform the Government could pursue to begin to resolve the issue.
"The first is to provide a woman's partner with the ability to make tax-deductible contributions to the superannuation account of their wife or partner while they are on maternity leave," Kennedy said.
"This would mean that the partner would effectively get two dips at the superannuation concessional contribution limit, with half of their contributions going to the other's account."
He said it might provide the impetus for couples to increase retirement savings while the woman was on maternity leave.
Kennedy said, alternatively, the Government could provide women returning to the workforce with higher tax-deductible contribution limits to recover savings from the time missed while they were out of work.
"Women can be out of full-time employment for up to 10 years, so there needs to be concessions in place for a number of years, not just a token time period," he said.
Kennedy said the current system disadvantaged anyone who took time out of the workforce, but it was mainly women who did not have the capacity to save individually during time off, due to financial pressures associated with family life.
According to research from the Australian Institute of Superannuation Trustees, women's superannuation balances often flat-line between ages 38-47.
The Association of Superannuation Funds of Australia said this break from work could lead to a difference of $80,000 between men and women's superannuation balances.
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