Chartered Accountants Australia and New Zealand (CA ANZ) has reiterated previous calls for the introduction of a lifetime concessional contribution cap ahead of the federal election, inviting both major parties to commit to simplifying the system.
According to CA ANZ superannuation leader, Tony Negline, a lifetime cap would not only alleviate the financial burdens imposed on all Aussies amid rising cost of living pressures, but would make it fairer for people with broken work patterns, particularly women.
“The gender pay gap in Australia is 14 per cent, which puts women at a significant financial disadvantage to their male counterparts,” Mr Negline said.
“An annual contribution cap holds women back from topping up their super when they are in a position to do so later in their careers,” she argued.
Earlier this year, in its pre-budget submission, CA ANZ asked the government to level the playing field for women, arguing that “we need to remove unfair policy barriers” stopping women from achieving financial independence and a secure retirement.
From 1 July 2021, the general concessional contributions cap is $27,500 for all individuals regardless of age.
Ms Negline argued that having to stick to the current cap puts women in a “dangerous position”, especially if they leave a relationship and need to support themselves independently.
“To fix this, we are asking both major political parties to commit to a lifetime super contribution cap, which levels the playing field for anyone getting back into the workforce and playing catchup on their finances.”
CA ANZ sees the lifetime super cap as a “simple, practical and non-inflationary policy solution” in an election campaign that has so far been absent of any bold superannuation ideas.
“If a woman re-enters the workforce into a high-paying job and the capacity to make generous super contributions, she should not be penalised for wanting to make up for the years super contributions weren’t being made,” Mr Negline said.
“That’s why today, we are calling on both sides of politics to adopt our sensible and equitable policy that levels the playing field for women and their finances.”
The gender gap in retirement savings has been a hot topic for years and although experts have investigated the factors contributing to the gap, meaningful solutions to address women’s disadvantage in the current system have been absent.
Recent research by the Workplace Gender Equality Agency (WGEA) revealed that at retirement age, women have accrued on average 50 per cent less in superannuation than men.
And although the government has enacted legislative changes to scrap the $450 threshold for super from 1 July, benefiting thousands of women, many have argued that a lot more needs to be done to address the gaping divide.
Earlier this year, both Australian Institute of Superannuation Trustees (AIST) and HESTA called for broader initiatives to close the gender gap.
Improvements suggested by AIST include paying super during paid parental leave, addressing the gender pay gap, and sticking to the timetable for increasing the super guarantee to 12 per cent.
