Scott Morrison has hinted the government is looking at allowing women to top up their superannuation accounts when they return to work after having a baby, in a bid to address the gender gap in retirement savings.
The treasurer’s proposal, promoted as a way to improve flexibility for people who have disruptions in their working lives, has attracted claims of “crocodile tears” given the Coalition has already cut the low-income super contribution that predominantly assisted low-earning women.
Fresh discussions about the super system coincide with the release of a new report by Deloitte which suggests broader changes to tax concessions in a bid to address fairness concerns. The Deloitte proposal would curb the tax advantage for high-income earners by ensuring everyone who contributed a dollar to their account would gain a concession of 15c, saving the federal budget about $6bn a year.
Malcolm Turnbull has indicated all options remain on the table in the tax reform debate, including reining in super tax concessions – a step the former prime minister, Tony Abbott, had refused to countenance.
Morrison used an interview with the Daily Telegraph to flag potential changes to another element of the super system: the caps on contributions that can be made before people are charged at their marginal income tax rates.
People under 50 can contribute up to $30,000 to their accounts this financial year before losing the concession and having subsequent amounts included in their general assessable income.
Morrison indicated the caps could be increased to allow working mothers to make greater voluntary contributions to their accounts when they returned to the workforce, to make up for the break in contributions.
“We don’t want women penalised for the choices they have made earlier in life,” he told the newspaper. “There has to be some flexibility in the system for people who may incur disruptions on their working life.”
Morrison said the changes he was considering would also provide flexibility for people who left the workforce to care for ill family members.
In an interview with 2GB on Monday, Morrison said people with disrupted work patterns were “behind the curve in terms of trying to build up their superannuation again” and “this is one of the issues of the many that we have to address”.
But Labor’s superannuation spokesman, Jim Chalmers, blasted the Coalition for its “appalling” record. He said abolishing the low-income super contribution and freezing the super guarantee served as “a double blow for women and people on modest incomes”.
“Turnbull government propaganda about super for women and low-income earners completely ignores the harsh impacts of their own policies,” he said.
The low-income super contribution, a government supplement of up to $500 a year for people earning an annual income of $37,000 or less, is due to end in July 2017 because it was included in the mining-tax repeal legislation.
“The government’s plans will see 3.6 million Australians lose up to $500 per year when the low-income super contribution disappears, and 2.2 million of those adversely affected will be women,” Chalmers said.
“To make things worse, freezing the super guarantee at 9.5% also wipes an average of $20,000 from the retirement savings of every Australian.”
Labor had previously indicated it was looking at ways to address the gender gap in superannuation. Chalmers said the average retirement payout for women was $85,000 less than men and a third of women had no super at all, which made them more reliant on the pension.
“The government should spare us their crocodile tears about women and people on modest incomes and give them a fair go in the super system,” he said.
A deputy leader of the Greens, Larissa Waters, said the government was out of touch if it thought new mothers or carers had spare cash to put extra money into their super.
Waters said the government should “help all women, not just those who can afford to top up their super”.
“While it’s great the government is looking at options to close the super gender gap, simply encouraging women to top up their super will only help the small number who can afford that,” she said.
“If the government wants to help women struggling financially to save for retirement, it should at the very least bring back the low-income super contribution.”
