Australia’s young women will be the worst hit by proposals to cut superannuation, the industry superannuation body has warned, as former prime minister Paul Keating also lashes moves to stall super increases.
Australian men currently have $282 billion more in their superannuation than women, according to Industry Super Australia (ISA) analysis.
And pausing plans to increase the amount of super Australians are paid will only prolong the inequality. Workers are currently paid 9.5 per cent in superannuation, with that set to increase to 10 per cent per cent in July 2021, before reaching 12 per cent by 2025.
However, those increases have been thrown into doubt by the COVID-19 economic downturn.
“More women than men are likely to receive the legislated super increase – delivering on this promise is key to bridging the gender super gap,” ISA director of advocacy Georgia Brumby said.
ISA found women retire with 36 per cent less in their superannuation than men, as caring responsibilities and work patterns lead to the average woman spending 12 years less in the full-time paid workforce.
The average woman aged 25-34 has $32,023 in their superannuation, while their male counterparts have $38,243, according to the ABS’ Gender Indicators for September 2018.
And across all age groups, the average female balance is $101,652 while men have $153,020, a difference of $51,368.
“Until we fix inequities in the super system we will continue to see women retiring with balances that are persistently lower than men,” Brumby said.
ISA said the Government needs to legislate mandatory superannuation payments on Commonwealth parental leave. As it stands, parental leave is the only type of paid leave that doesn’t attract superannuation payments.
Additionally, the super body called for the $450 superannuation threshold to be abolished. Currently, superannuation is only paid if the employee earns more than $450 in a month.
This rule has been criticised as disproportionately affecting women, who are more likely to work multiple part-time jobs.
The superannuation body has released the research as part of a campaign against the plans to pause the superannuation increase, targeting young women.
“Our members expect us to protect their financial interests and warn them about changes that will leave them worse off at retirement and that’s exactly what this campaign will do,” Brumby said.
Keating comes out swinging
Former prime minister Paul Keating has also thrown his weight behind the push to increase superannuation payments.
Speaking to the ABC’s 7:30, he said the superannuation increase is the only way to protect the integrity of the retirement system and deliver strong retirement outcomes.
"Since 2013, there's been a 10 per cent increase in labour productivity … [none] of it went to wages," he said.
"It's all gone to the balance sheet of companies. It's all gone to profits. So working people have been robbed in terms of real wage adjustments."
However, the Grattan Institute warns increasing superannuation will come at the cost of wages.
Additionally, the think tank claims increasing superannuation payments will disproportionately benefit workers who are already on higher salaries - statistically men - due to the generous tax breaks associated with super.
Instead, the Grattan Institute believes the Government needs to work to reduce poverty in retirement, namely by providing more affordable and social housing options.
The 2020 Retirement Income Review found that the increase would also lead to fewer wage increases.
Superannuation Minister Jane Hume said the legislated rise is still being considered in Government, however she has also claimed the rise will come at the cost of wage increases.