The Budget is another missed opportunity to address the gender super gap and take action to end the scandal of $5 billion a year in unpaid superannuation.
Despite the gender super gap increasing for many working mothers, the government has failed to heed the findings of the Retirement Income Review and has refused to pay super on Commonwealth Parental Leave Pay.
Mothers are continuing to pay a hefty future financial price for having a baby, with the gender super gap increasing by 5 per cent since 2013 for women in their early 30s. By not paying super on parental leave, the government is failing a cohort of women who could be at risk of retiring into poverty. There is even a bigger gap for women from culturally and linguistically diverse (CALD) environments who are typically more underpaid, as are single mothers.
Another opportunity to bridge the gender super gap was missed by not increasing the Low-Income Superannuation Tax Offset (LISTO) so that it would better align with existing income tax brackets, a tax cut would have benefitted more than 700,000 women on lower incomes.
Almost three million Australians a year have been underpaid in their super. The $5 billion a year rip-off demands urgent attention, as it can cost workers up to $60,000 from their retirement savings.
“This Budget was another missed opportunity to narrow the gender super gap and it’s disappointing the government did not make a modest investment in the financial future of millions of mums and pay super on parental leave,” Super Australia Chief Executive Bernie Dean said.
“Working mums are going to keep falling behind until super is paid on parental leave. The unpaid super scourge is a $5 billion-a year-problem politicians are refusing to fix. It is the workers’ money, they should get it when they get their wages.”
Moreover, the Australian Institute of Superannuation Trustees (AIST) expressed disappointment at the Federal Government’s failure to take more action to improve retirement savings outcomes for women in the Budget.
“We’re disappointed the Government has failed to take action such as introducing super on paid parental leave, assessing the financial coercion of women using the early release of super scheme in the early days of the pandemic, and more effectively addressing the gender pay gap,” AIST CEO Eva Scheerlinck said.
“This is in addition to-recommitting to the legislated timetable for increasing the super guarantee (SG) increase to 12 per cent by 2025, which would help all working Australians.”
Given that parental leave was the last paid leave without super, a situation which disadvantaged women most because they accounted for more than 90 per cent of all parental leave taken by primary carers, this has seen a number of women who were coerced into withdrawing from their retirement savings during the early release of superannuation scheme and which will have an impact on their retirement.
“For every dollar a man earns, a woman earns 67 cents on average, and women have 40% less superannuation on retirement and live longer,” she said.
“Closing this anomaly would allow parents to continue building their retirement savings while taking time out of the paid workforce to care for children and family. Although the Government has extended the length of paid parental leave by two weeks in this Budget, it’s disappointing this was not accompanied by an announcement it would include super.”
Ms Scheerlinck summed up stressing that this information is critical to avoid unintentionally facilitating abusive behaviour and also aligns with the Government’s commitment to end family violence.
“We also note the extension of the temporary reduction in the minimum drawdown rates of account based pensions, but this mostly benefits people with larger balances, and many retirees simply don’t have enough in super to be able to support themselves if they halve what they get from their account based pension.”
“…more action needs to be taken to improve its fairness, equity, adequacy, and transparency,” she said.
