John Collett
SOME of the tax breaks wasted on the fat cats should be redirected to those on modest incomes, which would help women save for a decent retirement.
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A lot has been written on the parlous state of many women's retirement savings, but there are good reasons for thinking that, at last, there is going to be some action.
The government appears to be serious about reforming taxation and there is a Senate inquiry looking into women's economic security in retirement.
There are some new figures from the Australian Bureau of Statistics that shows the gap between the superannuation balances of men and women is growing.
For example, 55 to 64-year-old women have about half the super of males of the same age and, if the trend of the past several years continues, the gap will widen.
Women are paid less for the same work than men and have time out of the workforce to look after children and their parents.
As Robbie Campo, deputy chief executive of Industry Super Australia, has pointed out to the Senate inquiry into women and retirement, about three quarters of single women are not able to retire with a comfortable level of retirement income.
At the other end of the retirement spectrum, there are now about 12,000 self-managed superannuation funds with more than $5 million in them.
Most funds of that size will be in pension phase. That means no tax is paid on the savings or on the money when it is taken out. It has to be the best tax shelter for wealthy retirees anywhere in the world.
There is a real chance that the government will adopt new thinking on how to curb the overly generous tax concessions to the well-off.
Much of the likely coming changes will simply be a partial reversal of Peter Costello and John Howard's changes to the super that came into effect in 2007.
They allowed for an unlimited amount of money to be accumulated in retirement with no tax paid on the money once in the pension phase.
Before the changes, there were complex rules on how much could be accumulated in super, tax free.
Our current system is one that strongly favours the well-off in their retirements, and therefore favours men disproportionately.
Many have accumulated so much in their savings that they could pay for a comfortable retirement several times over.
The obvious starting point to reforming the taxing of super is for the government to reverse its policy of ending the low income superannuation contribution (LISC).
Under LISC, the government pays up to $500 into the super accounts of low earners.
Millions of workers are on low incomes, most of them women. They pay more tax on super contributions than they do on their income.
Super contributions for these lower-earners have a tax of 15 per cent on them. However, the average rate of income tax they pay on all of their income is less than 15 per cent.
Government policy is that the LISC will end after June 2017. Labor supports its continuation.
