My 2022 Budget Super Wishlist

5 simple ways to make superannuation work harder for women, mothers and families.

This is my super wish list as we head into the 2022 Federal Government Budget. I'm an optimist, yet I am likely howling at the moon. However, with an increasing number of Independent Candidates including superannuation reform on their campaign platforms, I'm hoping someone out there is listening.

The gender pay gap is still generations away from closing. And for the foreseeable future, it will be women for the most part who are having the kids. So it's safe to say that a superannuation policy that is aware of these gender-specific issues, is vital to ensure an appropriate and fair allocation of public funding.

Ready for a radical policy change that will make a real difference and won't cost the government (ahem - taxpayers!) a cent?

Remove the super concessional tax rates for those with super fund balances over $5 million and cut the super tax rate for all women from 15% to 13%. One pays for the other, and at no additional cost to the taxpayer. Simple.

On a similar point, women live longer than men. No controversy there - it's a global truth. Despite that, superannuation policy is written around balances at retirement, not incomes in retirement. An $800,000 retirement balance pays the average woman 13% less than the average man due to the four years difference in longevity ($1,314 per week vs $1,147).

A simple way to close this particular gap, is to introduce a different cap on super. Alternatively, introduce a different Low Income Super Tax Offset (LISTO) which we expand on below. And even more importantly, introduce regulations that require future governments to be gender-aware when setting superannuation policy.

Mandate it! The Paid Parental Leave Scheme was introduced in 2011 but it doesn't include super. Sadly, the Federal Government dropped this idea (with rather cynical timing) the day before International Women's Day this year. Their argument is that the financial impact is not significant enough to warrant action.

I disagree. In fact, given that covering the financial impact is so easy for the Government, it is doubly significant that they have not done this. It's a real blow to women's morale and shakes our confidence that genuine systemic change is coming any time soon.

Women do most of the caring, and experience significant resultant financial impacts including the loss of super; our calculations suggest the median super balance at retirement for women is 50 percent lower than for men. There is a particularly high penalty for mothers. $280,000?is the average penalty for a woman with two children who takes an average six years out of paid work and then returns to part time work. Frankly, this is absurd given parenting is the one thing no society or economy can do without.

So, whilst payment of super on parental leave may not be deemed financially significant enough to act, there is more at stake here. This one simple action not only helps to close the gender retirement gap, it sends a strong message that our role as care givers in society is genuinely valued. Furthermore, mothers treated respectfully, empowered with financial dignity and choice, will deliver even more value through their families and in their return to paid work.

More controversial perhaps, is legislating financial compensation for the person 'staying home'. But it seems an obvious step given that in most circumstances two people tangoed to create a child. Most often women give up more financially in unpaid caring, which in the context of the growing divorce rate, makes them more vulnerable.

When a couple has a child, they need to pool resources to care for their growing family; this budget includes income and childcare. ?Both take effort, yet only one has a financial reward. More often than not, superannuation is left out of this equation. I believe there should be at least an equal superannuation payment to the person providing unpaid care to their child. Even better, a premium on it to account for sacrifices in career growth, confidence, skills, and network.

LISTO (Low Income Super Tax Offset) enables anyone earning less than $37,000 to have some of their super contribution tax refunded back into their super in that year. It's a good thing. But we'd love to see this go further, with LISTO becoming gender-aware. And even more specifically, mother-aware.

How??In the year that a mother earns less than $37,000, instead of just looking at offsetting the superannuation tax in that year alone, why not offset a five-year period, the current year and the four previous years? That would mean instead of a one-time payment of up to $500, up to $2,500 of a mother's superannuation taxes could go back into her super in the year her income drops.

While it would only make a small dent in the Motherhood Penalty, it's an important start which shouldn't be difficult to implement. And another example of the power of simple, incremental changes that together can combine to level the playing field for all.

At the moment, the Government’s superannuation comparison tool is raising consumer awareness due to its marketing budget. But the feedback we have from consumers is that it is creating more confusion than it addresses. And we have seen too many cases where certain fees are not included, skewing the figures badly.

Therefore, the government needs to increase funding to expand on the 'Your Future, Your Super' tool so that it includes all fees and all products and moves beyond the current 6 and 8 year performance analysis period to a more robust performance test over at least 10 years.

Or they could just come to Super Fierce, because we’ve already done the work. And we'd love to help.

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