Women still retire with 25 per cent less super, research finds

Women and low-income earners are being left behind by superannuation tax concessions that disproportionately benefit men and high-income earners, new research from The Australia Institute confirms.

The report demonstrates that super tax concessions exacerbate gender and income inequality in retirement, with women retiring with an average of almost 25 per cent less than men.

The numbers show more than 50 per cent of super tax concessions go to the top 20 per cent of income earners, and that the concessions come at a huge cost to the economy in foregone revenue, with an estimated $54.56 billion foregone in 2022–23.

The Australia Institute is calling for the government to end or at least limit superannuation tax concessions for the top 10 per cent of earners and people with high super balances, which they define as enough to not qualify for the part pension.

It says removing the tax concession for both super contributions and earnings from the top 10 per cent of earners would save more than $12 billion every year.

“Rather than provide incentives for saving, these super tax concessions are incentivising high-income earners with high super balances to avoid paying tax,” the report says.

“People with such large super balances do not need to put away ever more money for their retirement. But they are enabled to take advantage of the concessions to lower their income tax rates for both superannuation contributions and earnings.”

Women disproportionately affected

The gender gap in retirement has been well documented before, and is rooted in the fact that women in Australia earn on average around 20 per cent less than men each year.

That gap has tangible effects on people. Despite our high quality of life, Australia has the sixth highest rate of retiree poverty among Organisation for Economic Co-operation and Development (OECD) countries.

Older women are particularly affected, with single women over 60 being the most likely group in Australia to be living in poverty (defined as less than $30,000 income). The same group is also the fastest growing group experiencing homelessness, with the number of homeless women over 60 increasing by 7000 between 2011 and 2016.

How do we fix this?

Dr Minh Ngoc Le, researcher at The Australia Institute, says this disparity could be addressed by rerouting some of these overly generous superannuation concessions.

“It’s clear superannuation tax concessions are no longer fit for purpose, and foregone revenue from super concessions for Australia’s wealthiest individuals could instead be used to support retired Australians living in poverty.”

Dr Le says super tax concessions favour the wealthy to such a degree that they end up receiving more in government support than those on lower and middle incomes.

“While super tax concessions are designed to help all Australian workers saving for retirement, the distribution of these benefits is incredibly unequal,” she says.

“Treasury estimates show that, dollar for dollar, high income earners actually receive more government support than those on middle and low incomes because of our current superannuation system.”

Beyond the question of fairness, Dr Le says super tax concessions are also financially unsustainable, and will cost the government more in foregone revenue than it spends on the Age Pension by 2045–46.

“Continuing to provide tax concessions for the wealthiest Australians will soon cost the taxpayer more than the Age Pension, a complete reversal of what superannuation is designed to do,” she says.

Do you think the current super tax concessions are working? How do you think the gender imbalance in super can be addressed? Let us know in the comments section below.

Also read: Super funds accused of not doing enough for your retirement

Brad Lockyer
Brad Lockyerhttps://www.yourlifechoices.com.au/author/bradlockyer/
Brad has deep knowledge of retirement income, including Age Pension and other government entitlements, as well as health, money and lifestyle issues facing older Australians. Keen interests in current affairs, politics, sport and entertainment. Digital media professional with more than 10 years experience in the industry.
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