Women and young Australians have not seen substantial benefits from the Federal Government’s Better Super reforms and more needs to be done to encourage and enable them to save for a comfortable retirement, according to actuarial firm Rice Warner.
In a recent report commenting on the major political parties’ superannuation policies, Rice Warner stated that the super reforms have primarily benefited older Australians with higher super balances. In its view, women and young Australians should be the focus of future reforms.
“Saving women and children could be the catch-cry for the next round of changes,” it said.
Rice Warner put forward several strategies for improving women’s retirement balances, including asking young women to contribute an extra 2 per cent of their salary to super. The report stated that women on low incomes could make use of the co-contribution scheme, while those on higher incomes could take the salary sacrifice route.
“This simple device can increase retirement incomes by up to 30 per cent. However, the earlier they start in their career, the better.”
The report also stated that women could improve their retirement balances by opting to retire later.
However, Rice Warner said it would be “more equitable” for the Government to provide additional support for women who have taken time out of the workforce to bear and raise children.
“Since mothers suffer financially more than other women, the Government could consider allowing families to be eligible for the co-contribution scheme if a mother with dependent children is off work and not employed. The cost of this might be in order of $100 million a year.”
According to Rice Warner, another option is to provide a “super baby bonus”, which would attempt to meet the Super Guarantee contributions forgone during time out from the workforce for bearing and raising children. The firm suggested $4,000 as a suitable amount, stating that this would cost the Government slightly more than $1 billion a year based on the current birth rate.
Rice Warner also outlined several strategies for helping young Australians and their parents fund their education and save for a home deposit. These proposals included the setting up a ‘Youngsters Account’ within a super fund.
