One of the changes to come out of this week’s Federal Budget announcements was that the $450 per month threshold for employers to pay workers compulsory superannuation will be canned from July 2022.
The move is largely seen as a win for part-time working mums who miss out on super, and a step towards reducing the retirement income gap between genders.
This seems particularly important when new research shows a majority of partners aren’t willing to help out the other when one is out of the workforce.
Canstar asked 1,049 Australian adults* whether they thought the other person in a relationship should contribute to their partner’s super, if the partner took time out of the workforce.
The results revealed only 26% of those currently in a relationship thought the other person should make voluntary contributions to their partner’s superannuation in these circumstances. This left 74% of coupled-up Aussies unlikely to prop up their partner’s super.
For single Australians, the findings were even starker, with just 12% agreeing that the other person should contribute to the super of a partner who takes time off work.
Canstar’s money expert Effie Zahos said the $450 monthly threshold for employers to pay super had caused many working mums to miss out on a super contribution from their employer.
“The gender gap in super balances from women taking time out of full-time work for childcare is an issue that impacts them now and further down the line in retirement,” Ms Zahos said.
“The pandemic has pushed financial security even further back for women. We know $36 billion was withdrawn from super funds during 2020, of which women and young Aussies were the main withdrawers.
“While the removal of the $450 per month threshold won’t solve the gender divide in super balances, it will go some way to closing the gap when combined with other measures.”
She said we need a super system that supports every working Aussie, including those who are working an odd job here and there and part-time.
The scrapping of the $450 monthly threshold comes in the wake of a recent Retirement Income Review commissioned by the Federal Government, in which scrapping the threshold was recommended as one of several measures “that could improve the fairness of the retirement income system.”
But while this year’s Budget also included boosts to childcare rebates and new measures to make it easier for single parents to take out a home loan, it didn’t address some of the Review’s other recommendations, such as extending the compulsory super system to cover paid parental leave.
CEO of industry super fund HESTA, Debby Blakey, welcomed the scrapping of the threshold as a “pleasing” step that would “help improve financial security” for women and other low-income workers, but argued further reform was required.
“The fact that super continues not to be paid on parental leave remains a glaring gap in our super system,” Ms Blakey said.
The Association of Super Funds of Australia (ASFA) CEO Dr Martin Fahy said the removal of the $450 threshold would be especially beneficial to low income and casual employees, the majority of whom are women, drawing on Australian Taxation Office figures which suggested around 197,000 women and 114,000 men could benefit.
Dr Fahy also advocated for “broader structural reform to close the gap and improve retirement outcomes for women.”
*Survey of 1,049 Australians aged 18+. Commissioned by Canstar and conducted online via Qualtrics in January 2021.