KPMG proposes measure to improve super gender gap

With less than 10 per cent of Carer Payment recipients, who are predominantly female, accumulating super while performing unpaid caring work, KPMG has proposed super guarantee (SG) contributions on these payments that will help bridge the super gap.

In its latest Towards gender equity in retirement report, the firm suggests adding super contributions to the Commonwealth Carer Payment would be an “immense boost” for recipients of the payment who provide constant care to someone who has a disability, severe illness, or is frail aged and who often have to leave the workforce for years, leaving them with minimal super balances. 

Presently, although recipients of the payment are permitted to work for up to 25 hours a week while still receiving some amount of income support, data from December 2022 found over 90 per cent had received no additional earnings from employment in the prior fortnight. That is, less than 10 per cent were accumulating super. 

“From the individual’s perspective, a person who began caring at 35 years of age and continued to provide care and receive the Carer Payment for 15 consecutive years thereafter, the addition of SG contributions to the Carer Payment could be expected to boost the carer’s superannuation balance at retirement age by $123,000,” the report noted.

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Meanwhile, someone who started caring for a frail-aged parent at the age of 50 and received SG contributions for 15 consecutive years thereafter would retire with an additional $68,000 in super.

Based on the 2023–24 budget papers, KPMG estimated the initial cost of this measure at a rate of 12 per cent would be around $944 million, projected to reach $1.1 billion in the 2026–27 financial year. 

However, if those receiving care from recipients of the payment were to go into formal care or rely on the NDIS, those costs in the federal budget would rise. 

Additionally, KPMG argued this measure could result in further savings from potential age pension payments for these individuals. 

Based on median account balance data for 2019–20 from the Australian Taxation Office, the super gap between men and women stands at some 6 per cent between 18 and 24 years of age and 0 per cent from 25–29. It begins to then gradually increase from 14 per cent (30–34 years) to 27 per cent (40–44 years) and 32 per cent (50–54 years). 

At pre-retirement age of 55–59, the gap stands at 31 per cent.

The report noted that carers are predominantly female with more than 70 per cent of Carer Payment recipients being women. The only age bracket in which men do more caring than women is 75 years and over. 

The largest gender care gap is observed in the earlier working years, where the majority (80 per cent) of primary carers in the 25–44 age bracket are women. 

It said: “Owing to the greater compounding of returns on superannuation contributions made earlier in life, this pronounced gender disparity among younger carers exacerbates the gender superannuation gap. 

“Women called to engage in unpaid caring work are asked to pay a price not only in terms of lost earnings and missed career opportunities during their time as carers, but also in the form of a less comfortable retirement in the future.

“The cost of adding SG contributions to the Carer Payment is more than justified by the benefit to gender equity outcomes for informal carers and might be paid for by resultant reductions in government expenditure on the provision of formal care.”