Lobby group proposes new policy for low income earners
A superannuation advocacy group has called on the government to introduce an additional annual $1,000 government super contribution for low income earners to support those with inadequate retirement savings.
In its 2018-19 pre-budget submission, Women in Super (WIS) has proposed an annual $1,000 contribution to be made to Australians aged 25 and above earning less than $37,000 per annum until their balance reaches $100,000.
“One in two working women currently earns $37,000 or less per annum so clearly this is a measure that would benefit a substantial number of women, as well as men,” said the submission.
The measure, the submission explained, would see a woman aged 25 with a starting salary of $25,000 per annum and projected retirement balance of $205,210 reach $235,347 making a $30,137 or 14.7 per cent increase.
“This 14.7 per cent increase could mean the difference between retiring in poverty or not,” it said.
“From research carried out by Rice Warner, it was found that the proposed additional $1,000 contribution would cost $2.7 billion per year which is small when put into the context of the estimated $30 billion the government currently spends on super tax concessions annually.”
Women in Super said this was modest when compared to the estimated $10,000-$15,000 of annual superannuation tax concessions received by high income earners.
“Superannuation tax concessions are an important part of our retirement income system and have a part to play in encouraging Australians to save for their retirement,” said the submission.
“It is anomalous that those with the least resources and greatest likelihood of facing poverty in retirement currently receive no tax incentive and it is disappointing that savings from recent budget changes to superannuation tax incentives for high income earners were not redirected to low income earners.”
The submission also called for superannuation to be included in paid parental leave, with many women missing out on thousands of dollars of super.
“WIS strongly supports the Australian government’s Paid Parental Leave scheme (PPL), which commenced on 1 January 2011. However, WIS recommends that a superannuation component be included in paid parental leave payments in the same way as it is included in other payments, such as annual and sick leave,” the submission said.
“Whilst WIS encourages the growing trend for fathers taking PPL to care for young children, it is undeniable that women’s superannuation balances suffer as a direct result of absence from the workforce to raise children.”