If elected, the Labor Party will work to narrow the retirement savings gap by topping up the superannuation accounts of women on parental leave among several other measures.
Labor leader Bill Shorten has announced a plan to add $400 million to the super balances of women in receipt of Commonwealth Paid Parental Leave entitlements. It will also apply to those receiving Dad and Partner Pay payments.
Currently, women who take time out of work to have children are entitled to $719.35 per week for 18 weeks but this does not include superannuation contributions. Dads and partners are entitled to the same, though only for two weeks. To be eligible, you must earn less than $150,000 a year.
It is currently estimated that women will, on average, retire with up to 40% - or $113,000 - less than their male counterparts. This is because the gap begins to appear around age 35.
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According to Industry Super Australia, the average super balance in 2015-16 at age 60-64 was $270,710 for men and $157,050 for women.
"Labor believes that no Australian should be penalised for taking time out of paid work to have children. That is why a Shorten Labor Government will ensure that recipients of Commonwealth Paid Parental Leave and Dad and Partner Pay payments continue to receive super contributions," Shorten said.
If Labor is successful in being elected, the change would take effect from 1 July 2020.
Labor has also vowed to phase out the $450 minimum monthly income threshold for eligibility for the superannuation guarantee as it disadvantages those working part-time, casually and across multiple, low-paying jobs. This would commence on 1 July 2020 with a view to be completely phased out by 1 July 2024.
Shorten said a Labor Government will also make it easier for employers to contribute extra into a woman's super fund by amending the Sex Discrimination Act 1984, as well as consider and publish the impact that any future super reforms would have on women.
With super added to paid parental leave and the removal of the $450 threshold, an under-35-year-old mother of three making a median wage of $46,000 could retire with 6% or $30,650 more in super, Industry Super Australia modelling predicts.
ISA welcomed the announcement, labelling it a positive start to closing the gap.
"The system is unforgiving of broken work patterns, and yet women still provide the lion's share of care. Once women return to the workforce, catching up on super contributions and lost compound earnings is very difficult," ISA head of consumer advocacy Sarah Saunders said.
Providing super contributions during paid parental leave and phasing out the $450 threshold are changes that respond to both existing realities and the evolving workforce, she said.
Other policies worth considering include: a capital top-up for some low balance accounts; and the alignment of the Low Income Superannuation Tax Offset with scheduled (2021) SG rate and second tax threshold increases, ISA added.