Federal opposition Financial Services shadow Senator Katy Gallagher has put the prospect of superannuation contribution payments on paid parental leave firmly on the agenda saying “we need to look more closely at superannuation during periods of paid parental leave.”
“I do acknowledge that this is not necessarily a cheap or easy solution. Although it is something that we as a party have not yet reached a final position on ….that does not mean that we are not looking at it,” Senator Gallagher told the Sustainable Retirement Incomes Leadership Forum in Canberra on Thursday.
Currently women’s average super balances are around 44 per cent of men’s, meaning women are far more likely to live below the poverty line in retirement than men, says Robbie Campo, deputy CEO of Industry Super Australia.
“ISA’s submission to the Senate committee last year on the Economic Security of Women in Retirement included payment of the super guarantee in paid parental leave as one of its recommendations, but it’s not enough on its own to address women’s inequality in super,” Ms Campo told The New Daily.
Sandra Buckley, executive office of Women in Super, said such a move was “something we advocate. It is normal in many overseas countries. I received super contributions as part of parental leave in the UK 10 or 12 years ago,” she told The New Daily.
Research from Canstar has shown that a woman taking five years out of the workforce to raise children would retire with 20 per cent less in her super fund than a man on the same salary over his career who did not take time out for child rearing.
“The facts are clear: 43 per cent of women work part time, women working full time earn 19 per cent less than their male colleagues and women take on average five years out of the workplace to care for children or other family members,” Senator Gallagher said.
“44 per cent of women rely on their partner’s income as their main source of retirement income and according to a recent Senate inquiry into women’s superannuation at retirement. Men’s superannuation balances at retirement are on average twice as large as those of women,” she said.
“This concerning statistic means that women, particularly single women, are at greater risk of experiencing poverty, housing stress and homelessness in retirement.”
Research from Women in Super showed that women would need a super guarantee payment of 18 per cent to make up for their time out of the workforce and be on an even super footing with men, Ms Buckley said. “We advocate moving the super guarantee to 12 per cent as soon as possible,” she said.
The super guarantee is now 9.5 per cent of salary and is not scheduled to reach 12 per cent till 2025 following deferral of the measure by the Abbott government.
The Turnbull government’s latest reform package includes measures to allow people who have not used all their concessional superannuation cap of $25,000 to carry it forward for up to five years from July 2018. The move has been presented as a way of allowing women to boost super balances in later years.
Labor has rejected the move and Senator Gallagher said: “the fact is that these payments will help those on high incomes and will cost the budget $350 million over the forward estimates at a time when we don’t believe we can afford it.”
“It won’t provide a vehicle for women on lower incomes who have been out of the workforce for several years to contribute extra to their super balances,” Senator Gallagher said.