Finance Your Super Young mums getting a super leg-up but more needed to close gender gap

Young mums getting a super leg-up but more needed to close gender gap

New mums are benefitting most from the LISTO.
Young mums are the big winners of government's low-income super tax offset. Photo: The New Daily
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Government’s low-superannuation tax offset for low income earners is giving young mums a much needed leg up, and industry leaders say justifies increasing its size.

New research from AMP found women are the largest beneficiaries of government’s low-income superannuation tax offset (LISTO).

Women aged 25 to 33 – which AMP technical manager John Perri noted “corresponds with people taking time off work to have children” – receive the largest portion of that assistance

Graph showing beneficiaries of LISTO.
The above analysis includes the crossover period where the government replaced the low-income super contributions (LISC) with the LISTO. Source: AMP

Mr Perri said the research “confirms that the gender gap is real”, and the LISTO is playing a role in closing it despite its small size.

The maximum amount someone can receive under the current LISTO rules is $500.

The offset is paid to anyone earning $37,000 or less – and recipients don’t need to apply for it – with the actual benefit based on their actual super contributions for that year.

At the end of the day, it’s a very strong mathematical function here, and it’s all dependent on how much you earn in order for those superannuation contributions to be made,” Mr Perri said.

“The fact the LISTO jumps in that period is reflective of in this case women having  a lower income during that period.”

LISTO  not a fix-all

Superannuation’s compounding interest has on that money means the actual benefit women receive at retirement is much larger than the $500 going into their account.

But Mr Perri said that money alone is not enough to fix the gender superannuation gap.

“The latest ABS figures for late 2019 have shown the gender super gap is now 28 per cent, which is the lowest its ever been,” he said.

“But we would argue it’s still extremely high and something we as a nation need to work on.

[The LISTO] isn’t a silver bullet. It does help in a small way but it’s not the panacea.”

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A spokesperson for Industry Super Australia (ISA) similarly told The New Daily that more is needed to close the gender gap.

“LISTO has helped millions of low paid workers – mainly women – grow their super balances by stopping them from unfairly paying more tax on their super than on their take home pay,” the spokesperson said.

“But too many women are still retiring with about half the amount of super than most men.”

On average, women enter retirement with $90,000 less than their male counterparts, ISA research found.

But changes to the LISTO could change that outcome, the ISA spokesperson said.

“To help close the gender super gap LISTO should be increased, the $450 threshold abolished, and employers should be required to pay super on paid parental leave,” they said.

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