‘Make super fairer’, industry bodies urge government

13 February 2024

| By Rhea Nath |

Two industry bodies have reignited calls for paying superannuation on paid parental leave (PPL) alongside increasing the low-income superannuation tax offset (LISTO) towards improving retirement outcomes for all Australians.

The Super Members Council (SMC) and Association of Superannuation Funds of Australia (ASFA) have made submissions to the government ahead of the 2024–25 budget towards a more equitable super system that will lead to fairer and better outcomes.

The ASFA noted that the median superannuation balance in June 2021, for those aged 60 to 64, was around $212,000 for males and $159,000 for females, translating to a retirement savings gap between women and men of 25 per cent.

“This is an issue that is far bigger than the employer and the individual, and one that requires the backing and support of the government to put women on an equal footing to their male counterparts,” it stated.

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“With the acknowledgement that compounding of investment returns is the key to accelerating retirement savings, the earlier the additional funds are contributed the bigger the impact they will have on an individuals’ retirement savings.

“Further, we also acknowledge that each child a woman has further contributes to her time out of the workforce and consequently less retirement savings,” ASFA added.

Both industry bodies noted that parents who rely on the Commonwealth’s PPL scheme are more disadvantaged than those who receive employer-funded PPL with voluntary super paid on that leave.

According to an analysis by SMC, a mother of two who received super on the scheme would be $14,500 better off in retirement and a mother of one child would be $7,500 better off.

Similarly, the SMC found that implementing changes to the LISTO would boost the super of more than 1.2 million Australians, the majority of whom are women working in lower paying jobs or on a part-time basis and will benefit from an extra $500 million in 2025–26.

“Super has transformed the lives of millions of Australians, yet for many women, who retire earlier and live longer than men, the system is still falling short,” said SMC interim chair, Nicola Roxon.

“Paying super on parental leave and better aligning tax offsets for lower paid workers can be enacted almost immediately and will make a meaningful difference to women at retirement.

“We need to ensure super tax concessions are directed to those who need it the most.”

The body, formed in late 2023 from the merger of Industry Super Australia (ISA) and the Australian Institute of Superannuation Trustees (AIST), also called for a more culturally aligned super system to support First Nations people, given the life expectancy gap between Aboriginal and Torres Strait Islander peoples and non-Indigenous Australians.

Based on data from the Australian Bureau of Statistics for Australians at or after preservation age, Aboriginal and Torres Strait Islander people aged 50 to 65 were likely to live for less time than non-Indigenous Australians. For instance, an Aboriginal or Torres Strait Islander man aged 65 would live on average 3.9 years less than a non-Indigenous Australian. A female in the same cohort would live 4.4 years less than a non-Indigenous Australian.

“These figures point to the sad reality that for many Indigenous Australians, super is significantly more likely to be left as a bequest than used to support their retirement,” the SMC noted.

It recommended changing the super and tax legislative framework to recognise kinship in Aboriginal and Torres Strait Islander culture, compared to current super law that uses specific definitions of “dependant” and “interdependency relationship” when determining death benefit claims.

AUTHOR

Rhea Nath

Rhea L Nath is a journalist on Super Review and InvestorDaily, with a focus on funds management, superannuation, and institutional investment. Previously, she covered small business and entrepreneurship news at Dynamic Business and multicultural issues at Indian Link Media Group. In 2022, she was named Young Journalist of the Year at the NSW Premier’s Multicultural Communications Awards.

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