Industry Super Australia and Women in Super have both called a reform to the low-income superannuation tax offset (LISTO), saying the move would add tens of thousands of dollars to the retirement savings of more than 700,000 women.
The LISTO is a government super payment of up to $500 to help low-income earners save for retirement. It is available for super members who have earned $37,000 or less in a year, making up 15 per cent of the concessional super guarantee contributions an employer or a member has paid into their fund.
However, Industry Super and Women in Super have raised the alarm, noting the recent stage two tax cuts have moved the tax brackets up the scale. The budget tax reform has moved the 19 per cent tax bracket to $45,000 and lowered the tax concession to 3.5 cents in the dollar.
While the LISTO rate has stalled at $37,000 taxable income and the maximum tax refunded is $500 a year, the industry bodies have estimated hundreds of thousands of women will be left behind.
More than 1.2 million Australians are estimated to see a boost in their super savings by increasing the LISTO to cover workers earning up to $45,000.
Industry Super has also forecast the change would mostly impact female workers, with it benefitting 705,000 women who would take home 60 per cent of the extra payments.
Women in Super chair Catherine Wood said the LISTO is important for lower-income earners, to receive some tax relief.
“It can never match the $10,000 plus annual tax break received by high income earners, and the government should at least maintain the integrity of the provision which impacts over half the female workplace,” Ms Wood said.
“Young women on lower incomes have had to access their superannuation to get them through the pandemic. The least the government can do is to keep the LISTO relevant.”
Women in Super and Industry Super have also urged for the LISTO cap to be increased to $640, from the current $500, as the super guarantee rate is set to rise.
More than 200,000 women under 30 would receive the super boost, according to the bodies’ modelling, providing early career contributions that could make a difference over a lifetime of compounding interest. The changes could lead to a 30-year-old woman earning $40,000 being up to $56,170 better off at retirement.
Women would supposedly receive around $291 million of the super tax refunds, while the proposal would provide $488 million in super tax breaks to those earning less than $45,000.
Almost a third of all new recipients under the proposed LISTO increase would be women in their 20s and 30s.
Industry Super Australia chief executive Bernie Dean noted that on average, women are still retiring with almost half the amount of super compared to men.
“This proposal will put more money into women’s super balances early in life – going someway to bridge the gender pay gap that unfortunately persists in retirement,” Mr Dean said.
Industry Super also noted its LISTO proposal would be a boost after the early release scheme, which saw women withdraw around $14 billion from their accounts. The body’s analysis estimated around a quarter of female applicants had drained their balance.
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].