Published: 09 May 2018
The 2018 Budget has missed the opportunity to tackle unpaid superannuation and close the gender super gap by failing to re-invest over $1.6bn in windfall budget savings raised from ‘protecting’ small super balances and paring back a super tax break that only started this year.
The 2018 Budget has missed the opportunity to tackle unpaid superannuation and close the gender super gap by failing to re-invest over $1.6bn in windfall budget savings raised from ‘protecting’ small super balances and paring back a super tax break that only started this year.
Tonight’s budget papers reveal the Government will gain a surprising $1.615bn from three super measures which turn off default insurance for younger members, consolidate more inactive accounts to the Tax Office, and tighten rules for tax deductions on personal contributions.
Industry Super Australia’s Director of Public Affairs, Matthew Linden, said while these changes have sound justification an opportunity was missed to address equally if not more urgent issues.
“The Government is right to prioritise the erosion of small super balances – particularly for younger workers. A number of industry superfunds have already taken steps to change insurance coverage for younger members.
“However, it is disappointing the surprisingly large budget savings from the measures are not being used to fix unpaid superannuation or close the gender super gap.
“Rather than pocket the $1.6bn in savings it should have been be used to abolish the $450 super threshold, pay super on parental leave, and align the payment of super and wages.
“These simple policy steps alone would ensure millions of Australians who are missing out on super entitlements receive them – particularly women.
“Over three million Australians miss out on an average of $2000 a year in unpaid superannuation and the super balances of women lag males by an average of 40%.
Mr Linden also said it was vital to ensure unintended consequences from the balance protection measures don’t adversely affect other fund members. There is for instance a material possibility the insurance changes will impact risk pooling and lead to higher premiums for other members.
“Funds will need to work proactively to ensure that members who should retain insurance, including for instance those on parental leave, don’t lose important cover”, Mr Linden said.
Industry Super Australia also welcomed greater clarity on the Government’s proposed retirement income framework, however impediments should be removed which prevent trustees from formulating whole of life super products with the capacity for members to opt out.
Matt Linden is available for comment. Media contact Sarah Saunders 0409 055 156
Industry Super Australia provides policy, research and advocacy on behalf of 16 not-for-profit Industry SuperFunds who are the custodians of the retirement savings of six million Australians.
Industry Super Australia Pty Ltd ABN 72 158 563 270, Corporate Authorised Representative No. 426006 of Industry Fund Services Ltd ABN 54 007 016 195 AFSL 232514
*The above material, whilst correct at the time of publication may include references or statements which are no longer current.