Federal Budget 2021: superannuation win for women and pensioners

Massive superannuation changes are afoot for Australian women and pensioners in the federal budget but there is a catch.

Women working part-time will finally get access to compulsory super payments.

The Morrison government has scrapped the $450 a month minimum wage threshold on super following industry calls to help low-income earners – benefiting around 300,000 workers – the majority of whom are female.

Treasurer Josh Frydenberg said the government wants “all Australians to get the most out of the superannuation system”, noting that on average women retire with less super than men.

“This will improve economic security in retirement for around 200,000 women,” Mr Frydenberg said.

“Our plan will also make it easier for Australians to prepare for retirement and to be more secure once in retirement.”

Colonial Frist State general manager Kelly Power said it’s a good move, given women make up around 63 per cent of part-timeworkers in Australia.

Treasurer Josh Frydenberg said the government wants “all Australians to get the most out of the superannuation system”. Picture: Sam Mooy/Getty Images

“Abolishing the monthly threshold for paying superannuation will be extremely beneficial for anyone with a part-time job, in particular, women in part-time work, or who may be returning to part-time work after having children, and also for younger workers who may be juggling a couple of part-time jobs,” Ms Power said.

The other benefit for younger part-time workers it that it would help them get the “super ball rolling earlier”, and encourage them to think about their retirement savings, she added.

The average super balance for men is $17,000 higher than women – nearly $89,000 compared to just over $73,000 but the rate of growth is also faster for men.

The government made no mention about any changes to the planned super guarantee increase from July, which indicates it is still moving ahead to 10 per cent from 9.5 per cent. It is planned to rise to 12 per cent in 2025.

It is also giving older Aussies, including self-funded retirees, more flexibility to top-up their super and tap the equity in their family home.

Australians aged 67 to 74 will no longer be required to meet the work test before they can make voluntary contributions to super.

Pensions have enjoyed a superannuation boost in the budget. Picture: iStock

“We will allow those aged over 60 to contribute up to $300,000 into their superannuation if they downsize their home, freeing up more housing stock for younger families,” Mr Frydenberg said.

The existing $1.6 million cap on lifetime super contributions will continue to apply, rising to $1.7m from July.

The government is also changing the Pension Loans Scheme by providing immediate access to lump sums of around $12,000 for singles, and $18,000 for couples, effective from July 1, 2022.

Participants will be allowed to access up to two lump sum advances in any 12 month period, up to a total value of 50 per cent of the maximum annual rate of the Age Pension.

The government will also introduce a No Negative Equity Guarantee so borrowers won’t have to repay more than the market value of their home.

It will also allow older Australians to move out of legacy retirement products, together with any associated reserves, for a two-year period.

The Australian Institute of Superannuation Trustees, while welcoming the removal of the the $450 monthly income threshold, said more was needed to help women catch up.

“This budget provides … a small number of cohorts with some benefits in relation to superannuation but we are disappointed that nothing is being done for women who already retired, who don’t have anything in their super to help boost their savings, and particularly for anyone who took money out during the early release scheme because of the pandemic,” the Institute’s chief executive officer Eva Scheerlinck said.

Originally published as Federal Budget 2021: superannuation win for women and pensioners