Walking the walk on retirement equity

It is time for the major parties to stop talking the talk and to begin walking the walk when it comes to implementing policy changes which address women’s retirement incomes adequacy. 

Given the level of legislative and regulatory change which has been imposed on the superannuation industry over the past decade it is hard to be critical of the Federal Government’s undertaking of not implementing any significant, adverse policy change in its current term. 

Of course, everyone in the superannuation sector knows very well that whatever significant policy change does occur to superannuation will result from the Financial System Inquiry (FSI) and the Tax White Paper and that the electoral time-table is such that they will be implemented after the next Federal Election. 

But while there has been plenty of discussion about the cost of tax concessions and the preservation age, there has been insufficient discussion of the broader issue of achieving retirement incomes equity and equity will most likely to be achieved if the major parties can reach bipartisan agreement on objectives and outcomes. 

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And, if the agreement of groups such as the Financial Services Council (FSC) and Industry Super Australia (ISA) on elements such as the Low Income Superannuation Contribution (LISC) are an indicator, then reaching bipartisan agreement should not be the difficult. 

As the FSC’s Blake Briggs has pointed out elsewhere in this edition of Super Review there are a range of things governments and government agencies can do to help overcome the problem of retirement incomes adequacy for women which stop well short of radical policy change. 

As Briggs makes clear, it is possible to achieve significant change for the better by simply tidying up some existing legislation with the objective of removing the inconsistencies which act as impediments. 

Perhaps perversely, some of those inconsistencies reside in legislative frameworks actually intended to break down the barriers confronting women.  

Briggs cites the Sex Discrimination Act 1984 as creating barriers to addressing inequality noting that the Human Rights Commission has offered different solutions under different provisions in the Act to allow positive packages to be implemented.  

While he notes the supportive role of the Human Rights Commission, he reflects that legal framework creates complexity and uncertainty that would deter an ‘average’ employer from attempting to do the right thing.  

According to Briggs, some organisations have secured exemptions from the law under section 44 of the legislation, whilst others have been able to implement ‘special measures’ under section 7D(1) of the same legislation. Inconsistency and complexity in how the law applies to similar proposals is one example of the barriers that employers face that may deter them from undertaking such reforms in their workplace.  

In other words, there are many things the Government and government agencies can do to address the equity problems confronting women’s retirement adequacy which fall well short of radical policy change. 

Indeed, the simple bottom line for both major political parties is that the cost to the Budget of addressing the equity issues is relatively minor when compared to the benefits which would be achieved. 

Whether it is the LISC, or the implementation of lifetime contribution caps the underlying costs are relatively small when they are weighed against the long-run savings to the nation’s social welfare spend. 

Super Review and its sister publication, Money Management, has initiated a Women’s Wealth project which is directly aimed at providing a vehicle for discussing the impediments to achieving retirement incomes equity and how they can be overcome. 

There is no shortage of research confirming the need for genuine policy answers, not the least of which being new research released by ING Direct earlier this month which showed that the top financial concerns for women were feeling financially secure (59 per cent) and having enough for a comfortable retirement (57 per cent).

Smart policy-makers know these problems can and will be addressed.