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Colin Brinsden, AAP Economics and Business Correspondent
(Australian Associated Press)
KPMG is proposing a plan that would enable a parent returning to work to catch up on their “lost” superannuation while they have been looking after the children.
The consultancy firm proposes that a primary carer – usually a woman – should receive a rebate on the 15 per cent superannuation contributions tax for up to five years after the period out of the workforce.
The aim would be to allow the carer to catch up on half of the mandatory concessional contributions that would have been made had she or he not taken time out of the workforce.
This would incentivise the carer to resume at least the same level of paid work as they had before leaving employment.
KPMG Australia chair Alison Kitchen says there are a range of reasons that contribute to unequal superannuation retirement balances between men and women in Australia.
“Time spent out of employment is a major contributor to unequal levels of superannuation balances, as women miss out on super contributions in some of their peak working years,” she says.
“We propose the introduction of a targeted rebate of tax paid on contributions for primary carers as a mechanism to compensate for ‘women’s time out’.”
She said without it, women will continue to miss out on vital income during child-bearing years that can significantly impact on them later, especially in retirement.
These “timeout” losses particularly impact women in lower paid employment.
The report highlights that in the years approaching retirement age, the gender superannuation gap can be anywhere between 22 per cent and 35 per cent.
The median superannuation balance for men aged 60-64 years is $204,107 whereas for women in the same age group it is $146,900, a gap of 28 per cent.
For the pre-retirement years of 55-59, the gender gap is 33 per cent and in the peak earning years of 45-49 the gender gap is 35 per cent.
It says individuals with low superannuation balances are more likely to rely on the age pension in retirement.
As at December 2020, 55 per cent of those collecting the full pension were women.
“Financial insecurity in retirement contributes to poverty and housing insecurity of older women in Australia,” Ms Kitchen said.
“Our broad commitment is to help change that situation for the better by working with stakeholders to support targeted policy reform.”