The federal government should repeal the superannuation work test and introduce a spousal rollover measure in order to improve the disparity in superannuation balances between men and women, the SMSF Association has said.
In its 2020/21 budget submission, the SMSFA said the government should consider repealing the superannuation work test as it had no place in the current super environment.
“The work test is no longer relevant to the modern super system, especially as superannuation should be universal and not discriminatory,” it stated.
“Removal of the work test may result in an increase in female participation or an increase in the average female’s account balance. This will also especially be important moving forward with the limited opportunities available for people to obtain gainful employment.”
Highlighting the complexity of the recently introduced work-test exemption and the move to increase the work-test age to 67, the association said it was an “administratively efficient and opportune time” for the government to reconsider removing it.
“A removal of the work test will mean these prior measures are not necessary for the superannuation system,” it noted.
“The recently substantially lowered contribution caps and other thresholds and tests that must be satisfied provide the ideal timing to eliminate this complex and unnecessary test.”
In addition, it proposed a spousal rollover measure be introduced for super fund members in order to counteract the disparity in superannuation balances due to the gender pay gap and “regulatory context” of the sector.
“[A spousal rollover] measure would provide an effective and efficient way to significantly improve the superannuation retirement gap between partners, with particular benefit for women,” it said.
“[The measure] would also provide an attractive opportunity for couples who could restructure their superannuation to make better use of the transfer balance cap, facilitate simpler death benefit plans with an ageing population and reduce administrative complexity in retirement without providing a tax ‘loophole’.”