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Superannuation

Industry bodies back Labor’s retirement reform

The Association of Superannuation Funds of Australia (ASFA) has welcomed the federal opposition’s announcement of a package of proposed reforms to improve retirement outcomes for women.

ASFA chief executive Martin Fahy said the package recognised important social policy issues that arise due to women’s lower super balances and narrowing the gap would lead to better standards of living in retirement for women.

“Structural policy reform to protect and enhance the economic security of women in retirement is something that ASFA has long advocated for,” Fahy said.

“It is of critical importance to ensure that women are not condemned to experiencing poverty, and even homelessness, in retirement.”

The reduction to zero of the $450 threshold will be especially beneficial to low-income and casual employees, the majority who are women, giving them an entitlement to super that higher-paid employees have as a right, he noted.

Payment of super on parental leave payments addresses the issue of broken working patterns due to caring responsibilities and recognises that income replacement should incorporate super, he said.

Amending the Sex Discrimination Act will also allow employers to contribute more super for their female employees, he noted.

“This recognises that women, on average, live longer than men and also tend to bear the load of caring responsibilities, especially for young children, and as a consequence experience more broken working patters,” he said.

He noted there have been some positive government initiatives in recent years, such as continuing the refunding of super tax for low-income earners and allowing the ability to carry forward unused concessional caps.

“Measures such as those announced today will continue a positive trajectory in the system towards closing the retirement savings gap for women,” he said.

Household, Income and Labour Dynamics in Australia data prepared for ASFA indicates that in 2014 around 50 per cent of women aged 55 to 59 had a very low super balance – nil to $50,000 – compared to 33 per cent of men.

For women in that age group who are divorced or widowed, the percentage with low balances is even higher.

However, Australian Bureau of Statistics figures show account balances have grown strongly in recent years, with the disparity between women and men decreasing in the two years to 2015/16.

The SMSF Association has also welcomed the Labor Party’s package of reforms, but has urged it to reconsider its proposal to repeal concessional catch-up contributions if elected.

“Catch-up contributions have brought much-needed flexibility to the superannuation system and are an important measure to help people with broken work patterns improve their superannuation balances. Repealing it would be a backward step for the system,” association chief executive John Maroney said.

“We also believe policymakers should consider further reforms to allow couples to rebalance their superannuation holdings more equally between them and continue to improve the integrity of the SG (superannuation guarantee) system to make sure all employees receive the super owed to them.”

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