Sally Loane, the chief executive of the Financial Services Council (FSC), has slammed the Australian government’s superannuation system for discriminating against women. In her Women in Super address, Ms Loane argued the system only suits traditional, full-time employment, which women are less likely to hold.
According to ANZ Global Wealth research released in 2015, the pay gap for women jumps to nearly 20 percent by the time they reach retirement age. Women also earn approximately $700,000 less than Australian men over the course of their careers. The FSC has recommended several policy changes to the Economic Security for Women in Retirement senate inquiry to address this gender imbalance.
The FSC says employers should make superannuation contributions on the existing Commonwealth Paid Parental Leave scheme and extend contributions over further leave periods for carers. It estimates these changes would cost approximately $150 million per annum.
In addition, the FSC has called for the removal of barriers in the Sex Discrimination Act 1984 which would allow employers to make higher contributions to their female staff members in efforts to close the retirement savings gap.
Finally, the FSC would like to give employers permission to make superannuation contributions to workers earning below the minimum threshold of $450 a month.
“The threshold is little changed from the advent of the compulsory superannuation system,” Ms Loane said in her address. “The threshold is arbitrarily set and has little relevance to current work patterns.”
“Introducing flexibility around the threshold would also interact with the retention of the Low Income Superannuation Contribution, to ensure there is a tax benefit arising for low income employees from participating in the superannuation system,” she added.
Unless the superannuation system changes, women will always be disadvantaged by receiving lower wages than men and taking time away from full-time employment to raise children. Ms Loane’s solutions may go some way towards bridging the gap, but if the government does implement the recommendations it will take time before women in the workforce see the results.
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