The 2016 Budget changes to superannuation will discourage older women from contributing to super, according to NATSEM.
The National Centre For Social And Economic Modelling (NATSEM) modelled some of the changes to superannuation announced in the 2016 Budget, including the reduced concessional contributions cap and the lower threshold for Division 293 tax.
NATSEM found that tax paid would increase across all three age ranges modelled – 30-49, 50-64 and 65+. The modelling showed that men would pay more tax than women as a result of the changes, for example $2,090 more in tax for men in the 50-64 age range compared to $1,550 for women of the same age.
However NATSEM found that women above age 49 would be worse off than men in terms of tax paid as a percentage of income. The modelling indicates a 0.97% change in tax paid as a percentage of income for women aged 50-64, compared to 0.42% for men.
NATSEM also found that women were affected by the policies at much lower median gross incomes.
“While it could be argued that this policy change affects high income earners contributing large amounts to super, when we looked at the impact by gross income, we see that while this is the case for males, this is not the case for females aged 50 – 64, where the median income of those affected was $112,732, a reasonable income for women to think about contributing more to their concessional super,” said NATSEM.
“What these results suggest is that this policy is going to discourage female workers aged 50 – 64 and 65 and over contributing concessional amounts to superannuation, mainly due to the proposed tax on concessional contributions over $25,000 per year. The age groups affected most are at a stage in their lives where they should be thinking of contributing more to superannuation, and those in our modelling are earning enough to be able to do this, and should be encouraged to do it as contributions at the family building stage (30 – 49) are usually lower due to part time work and caring responsibilities. Unfortunately, the contributions cap will discourage females in these age groups contributing more to their super.”
NATSEM says some of this effect might be reduced through the proposed rollover of unused concessional contribution cap, though this wasn’t modelled. The lifetime $500,000 non-concessional contributions cap also wasn’t modelled “due to no data on lifetime contributions”.