Contribs tax for women under review
Tuesday, 22 July 2008 1:00pm
Senator Nick Sherry's comments on potentially removing the 15 per cent contributions tax on super of women at certain stages of their work life fuels further debate on how the government can help narrow the gender gap on retirement savings.
Senator Sherry, minister for superannuation and corporate law, told journalists at question time of an industry forum yesterday that one way the super savings of women could be increased is by getting rid of the contributions tax when they are on maternity leave or taking a break from full-time work.
Under existing rules, it is at the employer's discretion what level of paid maternity leave an employee gets and whether that comes with SG payments on top.
Sherry's views opened the door wide open for calls to legislate paid maternity leave with a superannuation component, which doesn't exist today.
"We'll certainly support that…there's no national paid maternity leave scheme in place and maternity leave doesn't fall under the ordinary time earnings (OTE) on what SG payments are paid on," said Fiona Reynolds, chief executive of the Australian Institute of Superannuation Trustees (AIST).
But providing paid maternity leave with a super component is just the tip of the iceberg. Half of the country's working population, more than 4 million female workers, are lagging behind on their super because of their career and lifestyle patterns.
According to 2006 data, the average superannuation payout for men is $130,000 compared to only $45,000 for women.
"We welcome any move that recognises that women are disadvantaged by the current superannuation system," said Kate Andrews, executive manager in marketing strategy at HESTA, a $13 billion super fund where women make up 83 per cent of the membership base.
"For example, if women don't participate in the workforce, like when they are on maternity leave or taking part-time work, the system hasn't found a way to make up for that," she said.
Sonia Williams, founder of a publishing business for working mothers, www.showmummythemoney.com.au, said, "It's good if the government can do more to help increase women's savings. It would alleviate the pressures so that when we're on enforced maternity leave, we're not going two steps forward, one step back."
But if the government is serious about bridging the gender savings gap, it should heed the industry call to abolish the $450 threshold, where those earning less than $450 per month are not entitled to SG payments.
This rule directly affects women who are on part-time, casual work or multiple jobs that individually pay well below this amount. According to HESTA's annual member survey last year, 51 per cent of of those surveyed work part-time.
"We worry about women who are earning less than that threshold, the intent of this [relic] rule is no longer relevant," said Andrews.
Reynolds said the government argues abolishing the $450 threshold would be an administrative nightmare, which is why AIST has launched a project researching how to remove that admin burden.
However, a media poll this week asking ‘Do women deserve special treatment over their super?' revealed that the public doesn't seem to care either way.
Some 47 per cent said yes, women deserve special treatment but roughly the same number, some 52 per cent, said no.
Michelle Baltazar
