Super industries budget verdict: good for women, bad for low paid workers

Super funds have welcomed measures to address the retirement savings gap but say more still needs to be done for low-paid workers.

Federal budget measures to address cost of living and the super gender gap have been welcomed by the super industry.

The superannuation industry has welcomed measures in the federal budget that address cost-of-living challenges and boost women’s retirement savings, but say more needs to be done to make the system fairer for all.

Cost-of-living relief, in the form of energy bill rebates, alongside the upcoming stage three tax cuts, will see more money in Australians’ pockets, while adding superannuation to paid parental leave will help address the gap that currently sees women retire with around 25 per cent less super than men, industry funds said.

HESTA chief executive Debby Blakey said the budget was good news for women, with measures to improve their retirement outcomes, increase wages in female-dominated industries and ease cost-of-living pressures.

“Many of our members are typically lower paid and facing increased pressure on household budgets as the cost of basic necessities has increased,” Ms Blakey said.

“Cost-of-living relief measures are welcome, and it’s fantastic to see the long-awaited allocation of funding for paying super on paid parental leave. This is a great investment in the financial future of women across Australia that will narrow the gender super gap, all the while sending a clear message that unpaid caring work is valued.”

Rest CEO Vicki Doyle said the funding commitment to include super contributions in the government’s paid parental leave scheme would help to address a longstanding gender imbalance in retirement outcomes.

“The gender super gap for Rest members nearing retirement has widened in recent years. This reform will help to close the gap, but it’s one of many needed to fully address this issue. We must build on this and enact further changes to make the super system fairer,” Ms Doyle said.

“This is a major investment in gender equity and a fairer retirement for countless Australian women. We congratulate the government for making a change that will lead to better financial outcomes for many Rest members.”

Aware Super CEO Deanne Stewart said paying super on the government paid parental leave scheme was farsighted, pragmatic and prudent.

“It will make a difference to efforts to close the retirement gap for women, ultimately helping to reduce demand for the Age Pension, so we’re delighted to see it now fully funded in the budget,” she said.

Paying super on government-funded paid parental leave will add $4250 to the average working mum’s retirement savings, at a cost of $1.1bn to the taxpayer over the next four years, according to Treasury estimates.

Paying super on government-funded paid parental leave will add $4250 to the average working mum’s retirement savings.

The measure comes a year after the federal government committed to lifting paid parental leave to 26 weeks.

Analysis from super industry group the Association of Superannuation Funds of Australia put the benefits to working mums even higher, saying it would boost retirement nest eggs by $5100. This doubles for women who take a second bout of paid parental leave, the industry group said.

“Future generations of Australian women stand to add thousands to their super balances thanks to this change in policy. This is a crucial and long-overdue step in improving their financial security in retirement”, ASFA CEO Mary Delahunty said.

The anticipated pay rises for early childhood education and aged care workforces, meanwhile, are further changes that would help close the retirement savings gap, the Super Members Council said.

“These are big steps on the road to gender equity – and the Government has signalled it intends to continue that work. Australia cannot rest until all women have a financially secure retirement,” Super Members Council CEO Misha Schubert said.

The super sector also welcomed measures to encourage investment in the crucial transition.

“Projects that provide an appropriate return for super funds and advance our nation’s prosperity are a double dividend for Australians,” Ms Delahunty said.

The Net Zero Economy Authority commitments and the development of sustainable finance markets will provide further clarity for big investors like Rest, Ms Doyle said.

“We represent one million young Australians under the age of 30 who will retire in a post-2050 world,” said Ms Doyle.

“We strongly support efforts to create long-term investment opportunities that enhance our members’ financial interests and also help contribute to the quality of the world our members retire into.”

But more needs to be done for younger and lower-paid workers, the funds warned.

Ms Doyle said Rest would continue to advocate for further reforms, including extending super eligibility to all under-18 workers and updates to the Low Income Super Tax Offset.

“All workers under the age of 18 should earn super regardless of the number of hours they work,” Ms Doyle said.

“We know that 77 per cent of Australians think it’s unfair that under-18s aren’t eligible for super unless they work 30 hours or more per week, and 82 per cent agree with changing this rule. It would allow every young Australian to engage with and benefit from our super system from the very first dollar they earn.”

Ms Blakey said it was unfair for low-income earners to pay more tax on their super contributions than their wages.

“That’s why we want to see the LISTO updated to reflect current tax and super settings,” she said.

“Reform to pay super on paid parental leave was a fantastic step forward for women’s financial security in retirement, but there’s still work to do to close the gender super gap and create a fairer super system for everyone.”