Industry Super Australia says the 2016/17 Federal Budget must include policies to help close the superannuation gender gap.
“Poorly targeted tax concessions are fueling a 45% super gap between men and women with new analysis showing women, lower paid and part-time workers missing out on much-needed help to save for retirement,” said Industry Super Australia (ISA).
Research released by ISA indicates the superannuation tax concessions are structured to benefit “full-time breadwinners in high paying jobs rather than a growing share of the workforce that works part-time”.
“We have a clear view of how the tax settings for super have failed to keep pace with the changing nature of work. The tax settings are a product of last century. They work very well for a full-time male breadwinner, but do a poor job of boosting the super of part-time workers – most of whom are women,” said David Whiteley, Chief Executive of Industry Super Australia.
Women receive only one-third of total superannuation tax concessions, according to the research.
“Times have changed and super reform needs to reflect that. Many more women are now in the workforce, but their typical work pattern is interrupted when they have children, and by parenting. This slows their ability to accumulate super and progress up the income ladder,” said Mr Whiteley.
“We now know the super savings gap is further widened by poorly targeted tax concessions that favour full-time, high paid jobs. The 2016 Budget needs to address this yawning disparity.”
ISA points out that low-income earners will “go backwards” once the Low Income Superannuation Contribution (LISC) ends from 1 July 2017, as is currently legislated.
“A more rational policy setting would seek to increase the potency of super contributions through more sharply targeted tax concessions,” said ISA.
ISA says this could either involve a “fundamental redesign” of the contributions tax – applying a marginal tax rate with a rebate, compared to the current flat tax rate – or retaining the LISC, “preferably set at a higher rate to not only offset the 15% ‘tax penalty’ on super contributions for people on a zero marginal tax rate, but also deliver a concession”.
“This could be delivered at no net cost to the Budget through paring back contribution and earnings tax concessions available to those with significant means and in no need of assistance to achieve a comfortable retirement.”
“If we don’t modernize now, the system will fail to allow the majority of our daughters to achieve this standard for decades to come, no matter how hard-working, educated or skilled they are,” said Mr Whiteley.