Labor plans to phase out $450 Super Guarantee threshold

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Labor has announced it would phase out the $450 minimum monthly threshold to receive Super Guarantee contributions, as part of a broader women’s super security package.

“Too many Australian women retire in poverty,” says a statement by Labor.

“A Shorten Labor Government will help women plan for a secure financial future, investing $400 million to strengthen Australia’s superannuation system and boost women’s superannuation balances.”

“Labor knows that closing the gender gap on superannuation is absolutely critical to Australian women having dignity and certainty in retirement.”

According to Labor, women in Australia retire with $113,000 less in super than men on average – a super gender gap of 40%.

One of the policies announced by Labor is phasing out the $450 Super Guarantee threshold – which applies per employer.

Labor says this is “in recognition that the income eligibility threshold disadvantages people who work part-time, casual and in multiple low‑paid jobs”.

The exact timetable for phasing out the $450 threshold is as yet unclear, with Labor’s statement not giving a date. Deputy Leader of the Opposition Tanya Plibersek told ABC News Breakfast that the $450 threshold would be phased out “over the next few years”. The Sydney Morning Herald reports that it would “fall by $100 every year and cease to exist by 2024”, suggesting a start around 2020.

Another policy announced would have the Commonwealth paying the superannuation contributions of recipients of Commonwealth Paid Parental Leave and Dad and Partner Pay payments.

“Labor believes that no Australian should be penalised for taking time out of paid work to have children.”

Additionally Labor would “Improve transparency by committing to consider and publish the impact that any future changes to super would have on women” –  likely along similar lines to the existing statements in legislation regarding human rights.

Labor would also make it easier for employers to make additional super contributions for female employees. This is seemingly referring to amending the Sex Discrimination Act to clarify the position of employers.

Removing the $450 threshold, paying super on Paid Parental Leave and amending the Sex Discrimination Act were some of the recommendations of the 2016 Senate Committee report ‘A husband is not a retirement plan’, Achieving economic security for women in retirement . Only last month the Government officially rejected many of the recommendations in the report.

Superannuation industry welcomes Labor’s policies

The policy announcements have been welcomed by representatives of the superannuation industry, including the Association of Superannuation Funds of Australia (ASFA), Industry Super Australia and the Financial Services Council (FSC).

“Structural policy reform to protect and enhance the economic security of women in retirement is something that ASFA has long advocated for. It is of critical importance to ensure that women are not condemned to experiencing poverty, and even homelessness, in retirement,” said ASFA CEO Dr Martin Fahy.

“Labor’s plan should be commended for helping all Australians, especially women, achieve a comfortable retirement,” said FSC Director of Policy & Global Markets Allan Hansell.

“The FSC has for many years paid super contributions for our own staff while on parental leave, as do some of our members. Another recent innovation has been for some super funds to introduce fee freezes for new parents. All employers and funds should think about what more they can do to boost retirement savings.”

Industry Super head of consumer advocacy Sarah Saunders said: “Adding super to paid parental leave, and phasing out the $450 monthly threshold are changes that respond to both existing realities and the evolving workforce.”

“Removing the threshold would ensure that everyone over age 18 who earns a wage, even across multiple job holdings, can build their retirement savings.”

The announcement was also welcomed by the superannuation advocacy group Women in Super. Chair Cate Wood said it was “heartening” to see the Opposition addressing “distorted gender-based outcomes” in the retirement system.

“The changes announced today will help reverse the current trend where women are retiring into poverty and homelessness,” said Ms Wood.

The SMSF Association welcomed Labor’s policies, including removing the $450 SG threshold.

“A modern superannuation system needs to recognise that working patterns have changed and the minimum monthly income threshold disadvantages individuals who work part-time, in casual jobs or in multiple low-paying jobs,” said Association CEO John Maroney.

“The non-payment of SG on these jobs disproportionately has an impact on women and it is pleasing that Labor’s proposal will remove this distortion in the current system.”

But he also urged Labor to reconsider their plan to repeal the concessional contributions catch-up measure.

“Catch-up contributions have brought much needed flexibility to the superannuation system and are an important measure to help people with broken work patterns improve their superannuation balances. Repealing it would be a backward step for the system,” he said.

“We also believe policymakers should consider further reforms to allow couples to rebalance their superannuation holdings more equally between them and continue to improve the integrity of the SG system to make sure all employees receive the super owed to them.”

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2 thoughts on “Labor plans to phase out $450 Super Guarantee threshold”

  1. Duane, don’t be such a party pooper by asking such a relevant question. I have the Passin Pop bottles and I am ready to pop the cork when Labor wins power … let the party begin!! Who cares about the hangover!

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