Here’s how to level up the genders

Submissions to the Senate show how easy it can be to help women's super balances catch up with men's.

Key points

  • Treating contributions as a marital affair would lift women’s retirement balances
  • So would a lifetime contributions cap
  • Fingers crossed Canberra will see the logic in these ideas

HOW’S THIS for a simple solution to the gap between retirement savings for the women and men of Australia.

Because women generally spend longer out of the workforce than men, doing most of the important work of raising healthy kids, there are fewer years for them to make concessionary (before tax) payments into super to top up their balances.

Why not allow them to make concessional contributions based on joint incomes with their spouses?

We’d love to say it was our idea but the credit goes to professional services firm Deloitte, which suggested it as part of its submission to the Senate inquiry into the economic security of women in retirement.

“One possible solution for women on parental (or maternity) leave could be that their partner could make tax-deductible or concessional contributions on behalf of his/her spouse up to an equitable limit,” it said.

“We believe this flexibility would have minimal impact on the budget deficit but would greatly assist in achieving a balance in retirement savings.”

Tax deductibility for super contributions made by the spouse sounds reasonable if they are made on behalf of a partner temporarily withdrawn from the workforce only to invest her efforts in caring for what will inevitably become another taxpayer. Surely the government will see the logic in that? Or let’s hope so.

Lifetime contribution caps

Another recommendation from Deloitte is for the introduction of lifetime contribution caps, to make up for the fact women’s careers are more truncated than men’s.

“A lifetime contribution cap … would allow women to catch up when they return to the workforce or increase their hours to the accepted full-time level,” its submission said.

The consultant reckons that over a 45-year working lifetime a concessional cap of $580,000 would produce a “comfortable” income stream in retirement (as defined by the Association of Superannuation Funds of Australia) to full life expectancy of about 75% of women who retire in 2050.

Caught in the middle

The first recommendation, allowing a spouse to make concessional contributions on a partner’s behalf, is better suited to benefit workers at all income levels. The second suggestion would likely appeal to women on high incomes.

With the tax treatment of superannuation under so much scrutiny who can say which of Deloitte’s ideas might get taken seriously? We may have to wait until after the next federal election, at least, before the super rules are rewritten … once again.

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