Australia’s peak super body, the Australian Superannuation Funds Association (ASFA) has suggested the Treasurer include a $5,000 “baby bonus” to be paid directly into superannuation funds following the birth or adoption of a child.
The proposal could boost the superannuation accounts of up to 300,000 women each year. The sum is the equivalent of the amount that a person would receive from the super guarantee contributions on a $60,000 wage for one year.
ASFA CEO, Dr Martin Fahy says: “A recent consumer survey undertaken by ASFA found more than 80% of respondents believe the government should take measures to boost the super balances of women who take time out of the workforce to have children.”
He says that broken work patterns, COVID-19 and the early release of superannuation have had a detrimental impact on the retirement savings of low-income earners and particularly women.
“It is now essential that repair be undertaken to low-income earners and women’s retirement budgets through targeted assistance,” Dr Fahy said.
According to AustralianSuper, women retire with up to 42% less super than men.
The $5,000 baby bonus would be in addition to proposals to pay the super guarantee on paid parental leave, and the legislation recently passed by Parliament that removes the $450 threshold where workers receive no superannuation.
Industry Super Australia said in a statement that they have long fought to remove this outdated law and the government should be applauded for passing the Enhancing Superannuation Outcomes for Australians Bill, which included the measure to remove the $450 threshold.
They said the median super balances of those impacted by the $450 threshold is only $12,000 and that securing them retirement contributions will be vital for their financial security.
Industry Super Advocacy Director Ms Georgia Brumby said; “Abolishing the $450 threshold removes a structural inequity that discriminated against those on lower incomes and disproportionately impacted women – it is a welcome first step towards addressing retirement inequality.”
Data published in a report by the Workplace Gender Equality Agency (WGEA) shows that the gender pay gap is 22.8%, which means that women are already disadvantaged in retirement.
WGEA’s Parental Leave Scorecard reveals that 81% of employers paid superannuation to parents while on paid leave, 74% paid it on the employer-funded portion and only 7% paid superannuation on both the employer-funded and government-funded portions.
WGEA Director, Mary Woolridge said in a statement; “Employers can send an unequivocal message to their staff that they are valued and important for the future, and in return, employees will have increased job satisfaction, productivity and loyalty.”
Currently, data shows that only 12% of parents who are paid primary carer’s leave are men.
“Australian businesses are stepping up and making no distinction between men and women taking paid parental leave. As they bolster their policies they’re increasingly ditching the labels of primary and secondary carer and recognising we’re all parents.
“The gold standard is the generous gender-neutral policies allowing flexibility in when and how it can be taken, available as soon as employees join an organisation – though there is a sliding scale in the lead up to this.
“Some employers are dipping a toe in the water by topping up salaries for their employees who are taking government-funded leave, while others are adding in superannuation payments to begin to close the retirement income gap,” Ms Woolridge concluded.
Financy Women’s Index founder and CEO, Ms Bianca Hartge-Hazelman welcomes the calls and says; “I see the ASFA proposal as being mainly beneficial to women as primarily the main carers of children but I also believe that people should be able to choose if they want to allocate that money to super or use it immediately to help with the cost of raising children”.
The ASFA Pre-Budget and Pre-Election Submission also considers other alternatives to increase the superannuation balances of low-income earners and gig economy workers including targeted payments depending on people’s income, balances and age.
ASFA’s submission says that when the super guarantee increases to 12%, men’s super balances will reach a total that is consistent with the ASFA Comfortable Retirement Standard, which is currently $545,000 whereas female workers who earn the median wage would have a $100,000 shortfall.