The move, taken by funds including HESTA, Cbus, AwareSuper, AustralianSuper, and Women Super, is aimed at preventing low-income workers, particularly women, from being penalised and paving the way for a fairer retirement future.
The Low-Income Superannuation Tax Offset (LISTO), designed as a superannuation payment to alleviate the tax burden on low-income workers, has come under scrutiny due to its unintended consequences.
Initially, the LISTO was in line with the low-income tax bracket set at $37,000. Although this tax bracket has since been raised to $45,000, the LISTO has remained stagnant at the $37,000 mark.
According to data provided by Women in Super, an industry advocacy group, a staggering 63 per cent of all low-income workers benefiting from the LISTO are women.
As such, Women in Super and the funds are asking the federal government to:
- Raise the income threshold for the LISTO from $37,000 to $45,000 and to introduce a mechanism to ensure that the eligibility for the LISTO is permanently aligned with changes to the second tax bracket.
- Increase the cap on how much LISTO is paid from $500 to $640.
- Extend compulsory super to the government’s Parental Leave Pay scheme.
“It’s grossly unfair that low-income workers – most of whom are women – are the only Australians paying more tax on super than on their take home pay. More than half a million Australian women earn between $37,000 and $45,000, and these simple changes will have a major positive impact on their super balances.”
Paul Schroder, CEO of AustralianSuper, said that the sought reforms have been on the agenda for “a long time”.
“It is time for action as too many women who take on caring responsibilities are being negatively impacted in retirement.
“There is no one simple fix for this, but it is imperative that despite the need for budget discipline we keep making progress. Paying super on government parental leave and making tax on super fairer for low-income earners will make a difference. We urge the government to keep working to reduce the gender super gap by making these changes.”
Similarly, Deanne Stewart, CEO of Aware Super, said the fund is “deeply concerned” about the structural inequities that mean its female members, who make up two-thirds of its membership, are significantly more likely to retire into poverty.
“We cannot continue to ignore the simple equity measures that would improve superannuation outcomes for Australian women.”
Moreover, Debby Blakey, CEO of HESTA, underscored the persistent disparities within the superannuation system, particularly disadvantaging women and individuals with lower incomes.
“Longstanding inequities remain in our super system that overwhelmingly disadvantage women and those on lower wages. This is a critical year to close the gaps in our super system and extend the benefits of our world-leading retirement system to more working Australians.”
Maja's career in journalism spans well over a decade across finance, business and politics. Now an experienced editor and reporter across all elements of the financial services sector, prior to joining Momentum Media, Maja reported for several established news outlets in Southeast Europe, scrutinising key processes in post-conflict societies.