Labor's $400m women's super pitch

Summary: Labor has flagged proposed changes to the Australian superannuation system to bridge the gender pay and retirement gap. 

Key take-out: The hallmarks of the proposed policy update are scrapping the $450 minimum monthly income threshold and continuing to pay super through parental leave. 

Superannuation is once again in the political spotlight, with Opposition leader Bill Shorten announcing a $400 million plan to help boost women's superannuation balances.

The Shorten proposal includes paying superannuation on paid parental leave and phasing out the current $450 threshold for eligibility for the superannuation guarantee to help those holding down part-time, casual and multiple low-paid jobs.

On average, Australian women retire with $113,000 less in their super than men – in percentage terms, around 40 per cent less. This is partly due to women leaving the workforce to raise families, and the fact one in every two employed women work part-time, according to official data.

Household, Income and Labour Dynamics in Australia data prepared for the Association of Superannuation Funds Australia (ASFA) indicated in 2014 that around 50 per cent of women aged between 55 and 59 had very low super balances (nil to $50,000) compared to 33 per cent of men.

A key part of Labor's proposed policy is ensuring those on parental leave will continue to receive super contributions, capturing any recipient of the 18-week Government Paid Parental Leave (PPL) scheme and Dad and Partner Pay payments.

In phasing out the $450 minimum monthly income threshold, Labor estimates this would add $11 to an individual's super on a weekly basis. Assuming annual investment growth of 6.5 per cent, this could provide additional retirement savings of up to $110,000 after 40 years of work.

The Labor policy also claims it would make it easier for employers to make extra payments into a woman's superannuation fund, as well as commit to consider and publish the impact that any future changes to super would have on women, which was not too long ago stipulated in Federal budgets.

Martin Fahy, CEO of ASFA, lends his support to the structural policy reform, especially with respect to the amendment of the Sex Discrimination Act.

“This recognises that women, on average, live longer than men and also tend to bear the load of caring responsibilities, especially for young children, and as a consequence experience more broken working patterns.”

As well, Sandra Buckley, Executive Officer of Women in Super, says the peak body welcomes the proposed policy.

“WIS has advocated for these policies to be introduced for many years as they impact hundreds of thousands of Australian women, and indeed many men too,” says Buckley.

“Paid parental leave is the only form of leave that does not attract superannuation and given that women are the primary takers of paid parental leave it has a profoundly gendered impact on women's superannuation balances.”

Chair of Women in Super, Cate Wood, notes the biggest of the proposed changes are the two key planks underscoring the ‘Make Super Fair' campaign that Women in Super launched last year – those being scrapping the threshold, and super continuing through PPL.

“The changes announced today will help reverse the current trend where women are retiring into poverty and homelessness,” says Wood.

However, Women in Super says more policy reform is needed, especially considering what it believes to be incommensurate expenditure on the superannuation system in recent times.

Among other things, Buckley and Wood are still lobbying for an additional $1000 annual contribution towards low income earners with low balances.

Allan Hansel, Financial Services Council Director of Policy & Global Markets, says this should encourage those in the industry to further innovate their superannuation offerings too.

Already some employers and funds have moved to pay super to employees on parental leave, and a few funds have introduced fee freezes for new parents.