Accounting giant Deloitte has urged the government to implement rules for the Family Court requiring superannuation to be divided on more equitable grounds in divorce settlements.
In a letter to the Senate Committee on the Economic Security for Women in Retirement, Deloitte said that single women, particularly those who are divorced, are one of the most disadvantaged post-retirement groups.
The Deloitte submission that while there have been significant advances in the way property settlements are reached since the introduction of the Family Law Act in 1975, “the division of superannuation tends to merely be a factor in the overall division of assets rather than being looked at as an asset in its own right”.
“Using actuarial principles it would be relatively straight forward to implement rules in the Family Court that required superannuation to be divided on more equitable grounds which better reflected the woman’s ability to save additional monies for retirement as well as her additional longevity,” said the submission.
Deloitte also said the government should provide a basic level of lump sum death benefit and disability insurance cover for anyone out of the workforce as a result of parental leave.
“This cover would be a lump sum, scaling down from, say, $100,000 up to age 40,” it said.
“The cover would be provided for a maximum of 12 months from commencement of parental leave and would be offset against cover under other insurance the individual would have (either through employer provided insurance, personal insurance policies or on-going cover provided by their superannuation fund).”
Deloitte said the cost of the cover could be funded out of consolidated revenue and estimated that the cost, based on ABS statistics, of the percentage that would be on parental leave at any point in time, and allowing for offsets, would be in the range of $15-20 million per annum.
The submission argued against the idea of increasing superannuation guarantee contributions for women as it would likely just result in women receiving a lower cash salary.
“We are concerned that in this time of salary packaging, women would simply lose out by receiving a lower cash salary as well as [it] being an extremely complex and potentially inequitable system to administer,” said the submission.
“For example, if we had a male and female employee on a $100,000 package, Deloitte does not believe that all employers would pay the additional $2,100, but rather would reduce the taxable component by this amount leaving the two packages the same but with the woman receiving less cash.”
The enforcement of a differential contribution system, it said, would therefore not be workable.
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