There are opportunities in the May 2023 Budget to improve the retirement balances of low and middle-income earners, many of whom are based in regional Australia, HESTA modelling suggested.
The super fund noted that more than 400,000 of its members lived outside metropolitan areas and had an average salary that is 11.6% lower than a HESTA metropolitan member.
Better targeting of tax concessions and paying super on the Commonwealth Paid Parental Leave (PPL) pay scheme could deliver a fairer super system for these members, it said.
“Superannuation is driven by a fundamental belief that dignity in retirement is for everyone, not just the lucky few. It’s time to acknowledge the gaps in our super system,” said Debby Blakey, HESTA chief executive.
“Low- and middle-income earners, many of whom live in regional Australia, as well as many women need solutions sooner than later to address the gaps that currently sees them retiring with far less security than they should.”
By introducing equity measures like super on PPL, mothers could see their super increase anywhere between 3.7% and 11%, HESTA pointed out.
Consulting firm Mercer had also voiced its support for super contributions on PPL in its pre-Budget submission.
In its recommendations to Government, HESTA advocated for extending eligibility for the low income super tax offset (LISTO) to those earning up to $45,000 and bringing the offset in line with the current Superannuation Guarantee (10.5%).
Additionally, it recommended introducing a carer’s credit to assist those taking unpaid parental leave rebuild their super and scrapping super tax concessions flowing to accounts with balances of more than $5 million.
“Every dollar our members can add to their super counts. That’s why the Federal Budget is a key opportunity to make real progress on boosting women’s financial security in retirement,” Blakey added.
“This is a critical year for super to address longstanding inequities that overwhelmingly impact women, as they shouldn’t be financially penalised after spending their lives caring for others.”
