New parents should be given a $5000 superannuation baby bonus to offset lost contributions into their retirement savings, according to the Association of Superannuation Funds of Australia (ASFA), which stated the bonus will also help close the super gender gap.
ASFA made the call for the superannuation baby bonus as part of its pre-budget submission, stating it would be applied directly to a super fund of a primary carer after the birth or adoption of a child.
According to the submission, the $5000 figure represents the equivalent a person would receive from super guarantee (SG) contributions on a $60,000 wage for one year and it was expected it would be paid to about 300,000 people a year.
The superannuation industry peak body noted the bulk of these payments would go to women, who were the predominant carers, but could also be paid to men where they were the primary carer of a baby, and the addition of $5000, contributed on behalf of a 30-year-old having a child, would lead to an $11,000 increase in super balance at age 67.
ASFA chief executive Dr Martin Fahy said there was a gap of 23.4 per cent in superannuation balances between men and women as they approach retirement.
Fahy added a recent consumer survey undertaken by ASFA found more than 80 per cent of respondents believe the government should take measures to boost the super balances of women who take time out of the workforce to have children.
“Broken work patterns, COVID-19 and the early release of superannuation, which was used to help get Australians through the pandemic, have eroded the retirement savings of low-income earners and women in particular,” he said.
“It is now essential that repair be undertaken to low-income earners and women’s retirement budgets through targeted assistance.”
In the submission, ASFA noted some employers provided superannuation payments in regard to paid parental leave of their employees and the baby bonus would supplement any extension of super payments to all paid parental leave.
“Payment of superannuation on paid parental leave together with the removal of the $450 a month threshold for payment of compulsory superannuation (both of which ASFA strongly supports and has advocated for) will go some way to improving the superannuation balances of women,” it stated.
“This is an issue that is far bigger than the employer and the individual and one that requires the backing and support of the government to put women on an equal footing to their male counterparts.
“With the acknowledgement that compounding is the key to accelerating retirement savings, the earlier the additional funds are contributed the bigger the impact they will have on an individual’s retirement savings.”
