In its submission to the Inquiry into Economic Security for Women in Retirement, PwC proposed that special consideration be given to single women who do not own a home to boost their economic security once retired.
“Single women, who are already likely to have much less super than men for a variety of structural reasons, are particularly vulnerable if they do not own a home. The aged pension is woefully inadequate in terms of rental assistance, equating to roughly $60 per week,” PwC said.
“Special consideration needs to be given to the economic needs of women who may find themselves in this situation in the future, and also to the needs of women who are already struggling in such circumstances right now,” PwC said.
Interestingly though, PwC said increasing the amount of super employers pay to women relative to men is “ill advised”.
“There are a number of groups in society that are disadvantaged in terms of retirement savings. Why not increase the superannuation guarantee for all of them? Why just women?” PwC said.
“It would act as a major disincentive for employers considering hiring women, particularly in small and medium-size businesses. This would lead to an even greater disparity in the already uneven participation rate for women,” the firm said.
PwC has also suggested increasing incentives for super contributions to be made by a working spouse, by increasing the quantum of the offset under the Spouse Super Contribution scheme.
“The current Spouse Super Contribution provides a tax offset of up to $540 per year for people that make contributions to a super or retirement account on behalf of their spouse who is earning a low income or not working,” PwC stated.
“This is a useful mechanism for women who take career breaks, but have a partner that still works, to continue to build their retirement savings,” PwC said.
The firm also said annual limits for concessional contribution caps make it difficult for some women, particularly once they re-enter the workforce, to make enough contributions to meet their needs for retirement.
“The current concessional caps of $30,000 per year for those under 50 years and $35,000 for those over 50 years are too restrictive, particularly for women on higher incomes,” said PwC.
“Rather than an annual concessional cap, the cap should be calculated across a person’s lifetime. This lifetime cap should be based on the level of savings required to provide the average person a comfortable living standard in retirement,” PwC added.
The firm said that another “impediment” to accessing the concessional cap is the 10 per cent rule for personal deductions.
Under this rule, if a person's income as an employee is less than 10 per cent of their total income, they can claim a tax deduction for a super contribution.
“Many women choose to be self-employed or start their own business when they return to the workforce, in addition to holding part-time paid employment, as it allows flexibility to also continue caring roles. This rule discourages women in this situation to make additional contributions to their super and should be removed,” PwC said.
PwC has also told the government to consider moving the non-concessional contribution cap to the age of 70.
“The age limit of 65 does not reflect the fact that people are living longer and are staying in the workforce longer. Nor does it reflect the fact that women tend to live longer than men. The age limit for the non-concessional cap should be moved to 70 years to allow women more time to make contributions to their super,” PwC stated.