Low income earners and women will benefit from the passing of a bill in parliament at the eleventh-hour before the federal election.
The Treasury Laws Amendment (Enhancing Superannuation Outcomes For Australians and Helping Australian Businesses Invest) Bill 2021 passed on Thursday (February 10), removing the $450 monthly threshold to be earned by workers before employers contributed to their super.
Compulsory payments will now begin from July 1 for an estimated 300,000 low-income earners, 63 per cent of whom are believed to be women.
The bill passed on the final sitting day of both houses of parliament before an anticipated May election.
Outdated structural feature
The $450 monthly superannuation threshold was an “outdated structural feature” of the super system and its removal would improve equity, delivering on a promise in this year’s Women’s Budget Statement, Hume said in a statement.
Effectiovely, every dollar earned by employees will now be aptiured by the superannuation system.
Australian Institute of Superannuation Trustees (AIST) chief executive Eva Scheerlink said removing the threshold was an “important equity measure”.
“(It will) make an immediate difference to the retirement outcomes of some of Australia’s most disadvantaged workers, including women, who make up two out of three of those impacted, many of whom work in two jobs just to make ends meet,’’ she said.
More needed to be done to address gender inequity in super savings, she added, including an introduction of payments for paid parental leave and no changes to an expected increase in the superannuation guarantee to 12 per cent.
More needed to address gender equity
Health and community workers’ industry fund HESTA, with 80 per cent of its members women, welcomed the move but said more was needed to address the super system gap.
HESTA chief executive Debby Blakey said the threshold had disproportionately impacted women who are more likely to work in multiple part-time or casual jobs for different employers.
“The result is that they can totally miss out on the benefits of super, which leaves them more vulnerable to poverty as they age,” she said.
“The long overdue removal of this threshold will ensure that they’ve now got a better opportunity to enjoy a more financially secure retirement.
“The fact that super continues not to be paid on parental leave remains an obvious gap in our super system that needs to be addressed.”
Poor retirement savings related to insecure work
Overdue changes to the monthly threshold would stop $59 million in super being withheld from low-paid workers each year said ACTU president Michele O’Neil.
“Poor retirement savings are directly related to insecure work and gig work, with some workers not being paid super at all under the $450 restriction despite working multiple jobs,’’ she said.