Can the gender gap in superannuation lead to a loss of freedom for women? – the Australian Institute of Superannuation Trustees (AIST) has asked.
In its submission to the Senate Economic Security for Women in Retirement Inquiry, AIST said many super proposals that had been generally discussed only marginally impacted on either the gender gap or fairness of the super system.
“Whether gender superannuation inequality will force women to have a lower standard of living than men or having to rely to a greater extent on any partner — can retirement lead to a loss of freedom for women?” AIST asked in its submission.
AIST said policies that had a higher impact included increasing the Superannuation Guarantee (SG) for women by two per cent, implementing a rebate system on contributions going into the system so that lower income earners are not detrimentally affected, and having a tax on retirement benefits (which would improve fairness as it would impact mainly on higher income earners).
However, it said “policies such as lifetime caps or increasing contribution caps (amounts which may be contributed to superannuation on a concessional basis) have a relatively minimal effect, as they apply mainly to higher income earners”.
AIST noted consideration should also be given to the SG being paid on Government support payments to improve super adequacy for lower income earners.
AIST proposed a two-stage retirement incomes review in its submission:
- Stage 1. AIST proposes that the Government convene a broad-based summit on the objectives of the retirement incomes system as a first step in establishing the process. This summit should respond to a discussion paper prepared by Treasury, result in a Green Paper, followed by a White Paper and legislation.
- Stage 2. This should be followed by a technical review addressing structural issues, a legislative audit, establishing parameters for super fund-level post-retirement frameworks and an analysis of the interrelationship between the various elements impacting on retirement incomes (e.g. superannuation, age pension, social security, aged care).
AIST also said it had long called for the extension of the Low Income Super Contribution, bringing forward the increased SG rate of 12 per cent, the payment of SG on paid parental leave, removing the $450 rule, and over the self-employed.
A quick fix for this so-called “gender gap” – we should aim for all people to have say 15 years in retirement, based on average life expectancy (which for males is approximately 82 and females 84).
This means that the male “retirement age” should be 67 and for females, age 69.
Those extra years of SG contributions for females will compensate for the time off they may have had earlier in their careers, while supported by their partners and any maternity leave entitlements.