Women are the winners in new superannuation changes which come in next week, with a $7,200 boost to retirement savings thanks to the introduction of super on government-funded paid parental leave, new research from the superannuation peak body, ASFA, shows.
ASFA’s research reveals that for a woman taking 24 weeks leave the PPL superannuation contributions will lead to $7,200 more at the time of retirement – rising to $7,800 when the regime is extended to 26 weeks.
The research also shows that, for a woman who earns the median wage (around $75,000), taking a year off work reduces her projected super balance at retirement from $611,300 to $587,500 – a ‘super loss’ of $23,700 (in today’s dollars).
By lowering this ‘super loss’ by $7,800, this is an almost 30% decrease in the ‘super gender gap’ that occurs during a year taken off work.
“This is a major win for Australian women who take time out of the paid workforce to have and raise children,” ASFA CEO Mary Delahunty said.
“While compulsory superannuation has been delivering on its purpose of providing a dignified retirement for most Australians, it’s long been known that women are often financially disadvantaged in retirement due to time taken out of work to have and raise a family.
“The introduction of superannuation payments on government paid parental leave from 1 July on will go a long way to closing the gender superannuation gap,” Ms Delahunty added.
Superannuation guarantee rise a win for all fund members
Another boost for all superannuation account holders coming in July is the increase of the superannuation guarantee rate from 11.5% to 12% – the last of the scheduled increases since the initial compulsory contribution of 3% was introduced over 30 years ago.
ASFA’s projections show that the increase from 11.5% to 12% will see an additional $20,000 added to the super savings of today’s 30-year-olds over a lifetime earning the median wage.
For the typical person currently aged 30 to 34 the increase in superannuation at age 67 is just over $100,000 in today’s terms compared to what it would be if the SG had not been increased over time from 9% in recent years.
This impact is spread by occupations with the benefits of the increase in super from 9% to 12% meaning:
- child care and aged care workers will be $75,682 better off in retirement
- labourers will be $79,000 better off in retirement
- those working in retail will be $81,000 better off in retirement
It also means the typical 30-year-old with $30,000 in their super balance today is on track to achieve a balance of around $610,000 in retirement, above the ASFA Comfortable Standard of $595,000.
While younger people stand to benefit the most from the increase, the cumulative effect of the higher superannuation guarantee rate means a greater proportion of retirees will reach the AFSA Comfortable Retirement Standard benchmark (currently around $52,385 per years for singles and $73,875 for couples).
“This really is an important milestone for all superannuation account holders,” Ms Delahunty said.
“Coupled with the long-awaited introduction of super on paid parental leave, raising the compulsory superannuation guarantee rate to 12% makes a meaningful contribution to superannuation fulfilling its objective of providing a dignified retirement for ordinary Australians.”
Click here to access ASFA’s research, including graphs.
ASFA’s Chief Policy and Advocacy Officer James Koval, and Chief Strategy, Corporate Affairs & Experience Officer Madeleine Morris are available for comment.
For further information, please contact:
ASFA Media Manager, Richard Garfield: 0451 949 300.
About the Association of Superannuation Funds of Australia (ASFA)
ASFA, the voice of super, has been operating since 1962 and is the peak policy, research and advocacy body for Australia’s superannuation industry. ASFA represents the APRA regulated superannuation industry with over 100 organisations as members from corporate, industry, retail and public sector funds, and service providers. We develop policy positions through collaboration with our diverse membership base and use our deep technical expertise and research capabilities to assist in advancing outcomes for Australians.
We unite the superannuation community, supporting our members with research, advocacy, education and collaboration to help Australians enjoy a dignified retirement. We promote effective practice and advocate for efficiency, sustainability and trust in our world-class retirement income system.
