The Morrison government is expected to abandon plans to overturn the legislated superannuation guarantee, which is set to rise to 12% over the next five years.
Following the release of the government’s Retirement Income Review, Treasurer Josh Frydenberg announced in February that the government was considering making the superannuation system more flexible.
Since then, however, the Morrison government has back tracked on its plans, ditching its push to delay the rise of the superannuation guarantee.
It has also rejected plans to give workers the choice to take either a rise in their super or pay, as well as plans to allow first-home buyers to access their super early, The Australian Financial Review reports.
The next legislated increase to the super guarantee is scheduled for July 1, when it will increase from 9.5% to 10%.
Minister for Superannuation and Women’s Economic Security Jane Hume confirmed that the July rise of 0.5% remains scheduled, and further details regarding changes to superannuation would be announced as part of the budget next month.
The federal budget, which will be handed down on May 11, will reportedly seek to address the economic inequalities between men and women that have worsened during the pandemic.
As part of this effort, the Morrison government is looking at ways to address the superannuation savings gap that exists between genders.
Christina Hobbs, chief executive of Verve Super, a super fund tailored for women, welcomes the Morrison government’s move to address the super gap.
“I’m glad that the Morrison government is now paying attention, after a long list of reports demonstrated the gender-blind spot at the heart of Australia’s superannuation system,” Hobbs tells SmartCompany.
In November last year, the Retirement Income Review showed the need to apply a gender lens to the retirement savings system in order to close the 35% super gap, Hobbs says.
The super gap, which starts with the pay gap, results in men as young as 18 to 29 having a balance of $10,166, whereas females in the same age group have just $8,408.
Over time, the trend grows, leaving women with an average retirement balance of $138,154, compared to $292,510 for men, according to WEGA.
As well as the fact that women earn, on average, 13.4% less than men, they also often have lower participation rates in the workforce and take more time off for motherhood and caring responsibilities.
Hobbs says while urgent reform is needed to make the system fairer, she is “deeply concerned” that the measures being discussed may “shift the burden of closing the gap back on to women”.
“The failure to address long-standing structural gender inequities in the superannuation system, while continuing to push the burden onto women to close the gap through personal savings will consign the next generation of mothers to financial insecurity,” she says.
Hobbs says it is vital that Australia, like other wealthy countries, consider the unpaid caring work women do when designing its retirement system.
Last year, Verve Super released a report with nine key recommendations for closing the gap, including paying a form of caring credits to carers who undertake unpaid work.
Verve Super also recommend abolishing the minimum superannuation guarantee threshold of $450, which sees many casual workers — more likely to be women — missing out on super, Hobbs says.