Legally allowing employers to pay women more superannuation, extending paid parental leave and reconsidering super tax concessions are some recommendations from a Senate committee to improve women’s financial wellbeing.
Following its inquiry of several months into women’s economic security at retirement, the Economics References Committee says Australia needs to “redouble its efforts to achieve equality at work” so women can save as much for retirement as men.
The committee has 19 recommendations, including a thorough review of legislation to make sure laws reflect the reality of women’s working lives, a range of changes to the superannuation system to put women in a better position, and that government policy generally is drafted with a focus on women’s economic situation.
Key changes we need
Extending Commonwealth paid parental leave from the current 18 weeks to 26 weeks is a key recommendation from the committee. It says this can be financed by a combination of government and employer funding.
It also backs the calls of ANZ and others who submitted to the inquiry, that employers should legally be allowed to pay more super to women.
“The committee recommends the Australian Government amend the Sex Discrimination Act 1984 to ensure companies are able to make higher superannuation payments for their female employees when they wish to do so.”
Another key area is changes to superannuation. The committee recommends the superannuation guarantee be paid throughout Commonwealth paid parental leave, re-target super tax concessions so they’re fairer, that support is maintained for low-income earners and the super guarantee is boosted from the current 9.5 per cent to 12 per cent sooner than planned
The problem the committee focused on has been a persistent point of coverage for ANZ Women: that men retire on average with twice the superannuation balance of women.
And this happens because women generally work in lower-paid roles, and are more often part-time or casual in their employment. They are much more likely to take career breaks, looking after children or others. That amounts to much less earnings than men over a lifetime.
“Australia's retirement income system does not adequately accommodate this difference. It structurally favours higher income earners who work full-time, without breaks, for the entirety of their working life,” states the Economics References Committee in its final report, ‘A husband is not a retirement plan’ Achieving economic security for women in retirement.
“…the committee is of the view that Australia needs to redouble its efforts to achieve equality at work—paying women equally, offering access to career development and leadership opportunities, and accommodating rather than penalising those who care for others.”
Summary of key recommendations
- Amend the Fair Work Act to address gender pay equity and for employers to accommodate flexible work.
- Review the Sex Discrimination Act to include indirect discrimination, for employers to accommodate workers’ needs (flexible work) and so employers can pay women extra super.
- Extend Commonwealth paid parental leave to 26 weeks.
- Continue to support the Workplace Gender Equality Agency.
Policy, principally affecting retirement incomes, guided by:
- “the diversity of experience and outcomes in retirement incomes for different groups in society”
- the need to deliver a decent living standard
- mechanisms of assessment and benchmarking.
- Review Commonwealth rent assistance and housing policy for the aged.
- Reconsider means testing of the age pension.
- Do not increase the age of eligibility for the age pension.
- Maintain current indexing, benchmarking of the age pension.
- Pay super guarantee during Commonwealth paid parental leave.
- Government should set objectives for superannuation, referring to women’s retirement incomes.
- Make super tax concessions more equitable.
- Retain the low-income super contribution.
- Accelerate the increase of the superannuation guarantee rate to 12 per cent.
- And pay the super guarantee for those earning under $450 a month.
Source: The Senate Economics Reference Committee. 'A husband is not a retirement plan'. April 2016