A dozen superannuation funds have signed a letter to the federal government urging reform that could help end gendered inequalities in super.
Advocacy body Women in Super, alongside ESSSuper, AustralianSuper, Aware Super, CareSuper, Cbus Super, HESTA, Hostplus, NGS Super, Rest Super, Spirit Super, TelstraSuper, and UniSuper, is calling for changes to the low-income superannuation tax offset (LISTO) that disproportionately affects women.
“[LISTO] is a super payment for workers on low incomes to ensure that they are not the only Australians paying more tax on their super than on their take-home pay. Sixty-three per cent of all low-income workers receiving the LISTO are women,” the organisation said.
LISTO was originally aligned with the low-income tax bracket at $37,000. This tax bracket has now increased to $45,000, but the LISTO has stayed at $37,000.
Women in Super and the assorted funds are asking the government to raise the income threshold and introduce a mechanism to ensure that the eligibility for the LISTO is permanently aligned with changes to the second tax bracket.
They have also asked to increase the cap on how much LISTO is paid from $500 to $640.
Last month, the Association of Super Funds Australia (ASFA) suggested the threshold for the LISTO be increased from $37,000 to $45,000.
“To ignore this simple change means the lowest paid women in our community are essentially paying for the retirement of higher income earners who are receiving far more generous support,” said Women in Super chief executive, Jo Kowalczyk.
“It’s grossly unfair that low-income workers – most of whom are women – are the only Australians paying more tax on super than on their take-home pay.
“More than half a million Australian women earn between $37,000 and $45,000, and these simple changes will have a major positive impact on their super balances.”
According to modelling by Industry Super Australia, a 30-year-old woman earning $40,000 a year would be up to $56,170 better off at retirement through such measures.
Kristian Fok, CEO of Cbus, observed the model of industry super introduced four decades ago was designed to create a universal benefit that would extend not just to blue-collar workers, but also to female members.
“We endorse these calls to action to address policy challenges where the system still must be strengthened to address women retiring with substantially less super than men and too often retiring with low or non-existent balances,” Fok said.
Debby Blakey, HESTA CEO, said it has been encouraging to see the federal government increase its focus on gender equality.
“However, longstanding inequities remain in our super system that overwhelmingly disadvantage women and those on lower wages. This is a critical year to close the gaps in our super system and extend the benefits of our world-leading retirement system to more working Australians,” she said.
The letter has also called on the government to extend compulsory super to the paid parental leave scheme, an aspect that went unaddressed in the 2022–23 budget.
In a discussion with the Financial Services Council (FSC) in May, Financial Services Minister, Stephen Jones, stated there was a limit to what they could do in the equity agenda.
“I encourage everyone to look at the entirety of the budget across the equity agenda,” he explained.
“There’s a limit to how much we can spend. We’ve extended paid parental leave, we’ve got childcare initiatives and there are substantial reforms for single parent payments.”
Jones was under the belief that paid equity was the strongest measure to reduce the gap in super balances between men and women.