The Federal Budget includes important measures to improve transparency and fairness in the superannuation system, but far more work is needed to strengthen gender equity, Aware Super says.
The fund’s Chief Executive Officer, Deanne Stewart, said the Budget would strengthen the super system, and the Government’s efforts to ease cost-of-living pressures were also important and commendable.
Those efforts need not have come at the expense of addressing gender inequity in the system, however, and the fund would have liked to see the Government announce super on paid parental leave.
“On balance, this is a positive and welcome Budget – we just would have loved to see the Government grasp the nettle on some other much-needed reforms,” Ms Stewart said.
The Budget included two key initiatives affecting the super system, both announced in prior months.
The Australian Taxation Office will receive extra funding to help detect and recover unpaid super. According to the ATO, $3.4 billion of super went unpaid in the 2020 financial year.
The Government announced the extra funding in May, when it unveiled plans to mandate payday super – meaning all employers will be required to pay super at the same time as they pay wages. While some employers, particularly bigger companies and those in the public sector, already pay super every payday, the law currently allows for it to be paid as infrequently as every quarter.
Ms Stewart welcomed the extra resources for the ATO, saying that coupled with payday super, “it will help ensure Australian workers aren’t deprived of important retirement savings they’re owed and are better placed to keep tabs on their super payments”.
The other Budget measure affecting the super system was announced in February – a higher earnings tax on super balances in excess of $3 million.
Starting from July 2025, a tax of 30 per cent will be applied to earnings on the proportion of any super account balance above $3 million.
The current concessional tax rate of 15 per cent will continue to apply to balances up to $3 million.
According to the Government, the tax will only affect about 0.5 per cent, or one in every 200, of Australians with super accounts.