Superannuation funds have welcomed the boost that Treasury’s improvement on the Low-Income Superannuation Tax Offset (LISTO) will have for women and younger members.
Treasurer Jim Chalmers announced on 13 October that the federal government’s proposed reforms will raise the LISTO eligibility cap from $37,000 to $45,000, increasing the maximum payment from $500 to $810 as of 1 July 2027, reflecting the current 12 per cent super guarantee rate.
In doing so, this will guarantee that people earning under $45,000 a year are not penalised with higher tax inside super than outside of super. These changes could potentially inject an extra $15,000 into the super balances of 1.3 million low-income Australians when they reach retirement age.
This move will particularly prove beneficial for women, who make up 60 per cent of low-earning Australians. These changes could result in up to $60,000 more in women’s super balances at retirement.
Commenting on the move, superannuation funds praised the boost it will give to female superannuation members.
At HESTA, where almost 80 per cent of its members are female, CEO Debby Blakey said: “The LISTO is the only tax concession more likely to be paid to women than men, as they tend to have lower incomes than men and face higher effective marginal tax rates than men.
“Nearly 80 per cent of HESTA’s more than one million members are women, many of whom work in typically lower-paid sectors such as aged care and early childhood education and take time out of the paid workforce to care for others.
“In FY24, around 130,000 HESTA members received a LISTO payment, but more than 70,000 members earning between $37,000-$45,000 missed out on $35 million in super contribution ‘refunds’ because of the LISTO misalignment with tax brackets.
“Lifting the LISTO eligibility and payment amount will help ensure more than a million low-income earners can build a more secure retirement, and help create a fairer super system.”
Kathy Vincent, CEO of Australian Retirement Trust (ART), said: “The changes announced by the Treasurer will contribute to a fairer super system for everyone, which is good for the individual member and good for the nation. Increasing the LISTO will benefit Australians who are working in lower-paid roles and those who have taken a career break to care for loved ones.”
Melinda Howes, AMP group executive for superannuation and investments, said: “The improvements to the LISTO will help build retirement savings for lower-income Australians, especially women, and support a fairer retirement for all. AMP will work constructively with Treasury and the ATO to help ensure smooth implementation for members and funds.”
Not only women will benefit from the LISTO changes, with Cbus pointing out that younger workers will also see a positive impact from the move. Some 45 per cent of Cbus members who were under 18 received a LISTO payment last year, it said, with construction being the largest employers of full-time workers who are under 18.
The change to increase the maximum payment to $810 will ensure workers are not unfairly penalised by rising superannuation contributions.
Kristian Fok, CEO of Cbus, said: “This is a win for young tradies, apprentices, women in construction and part-time workers, providing a boost to their retirement savings. Lifting the threshold will ensure the super system is fairer for decades to come.
“Raising the LISTO cap from $500 to $810 will support low-income workers, including thousands of Cbus members.”
