Aligning the low income super tax offset with income tax thresholds could benefit more than 600,000 Australian women who are earning between $37,000 and $45,000 per year.
The low income super tax offset, or LISTO, gives a payment of up to $500 to people who earn $37,000 or less, per year. It’s a government superannuation contribution designed to ensure that low income earners do not suffer a tax penalty for making super contributions.
At the moment, LISTO is not aligned with income tax thresholds for those earning between $37,000 and $45,000 – of whom, 632,000 are women.
Australia has 2.6 million workers classified as low income earners, the majority (60 per cent) of whom are women. Women In Super is calling for LISTO to be increased and future proofed, ensuring that it is permanently tied to income tax rates.
“Women in Super would like to see this fixed by the amount of the LISTO being increased and future proofing it by ensuring that it is permanently pegged to income tax rates,” says Women in Super CEO Jo Kowalczyk.
The not-for-profit organisation says that if this were to happen, a 30-year-old woman earning $30,000, could be $56,170 better off in retirement.
“The lowest paid people in the country continue to be shortchanged with the Low Income Super Tax Offset (LISTO), paying a tax penalty that high income earners are not paying on their Superannuation Guarantee (SG) contributions.
“Realigning the LISTO is a key fairness ask. Low income earners are the only group who pay more tax on their super than they do on their take home pay. And this is the group who can least afford to pay a tax penalty and they are mostly women.”
What other policy changes need to be made?
Along with calls to fix LISTO, Women in Super launched their policy priorities, with the focus placed on improving fairness, equity and sustainability for women when it comes to superannuation benefits.
“It is unacceptable that vulnerable women and care workers continue to be victims of systemic issues in our retirement system,” said Kowalczyk.
“These longstanding, feminised issues cannot continue to be steady leaks in our retirement system.”
Each year, 75,000 women are retiring but movement of policy and societal change to support women retiring into poverty is slow.
Across the country, part-time nannies, housekeepers and domestic workers who work under 30 hours do not receive super contributions.
“The stroke of a pen could finally fix the fact that across the country part-time nannies, housekeepers and domestic workers are missing out on super. This is one of the last remaining groups of people doing paid work under 30 hours who do not receive super contributions, and they are overwhelmingly women, and are at risk of retiring with no savings,” says Kowalczyk.
As of 1 July 2024, super will be paid on the government paid parental leave scheme. Women is Super is calling for Superannuation Guarantee contributions to also be given to those receiving the carer’s payment, 74 per cent of whom are women.
“The Superannuation Guarantee (SG) being raised to 12 per cent from 1 July 2025 will make the biggest difference to women’s retirement outcomes in absolute terms of any policy change,” said Kowalczyk, acknowledging as well that the $450 threshold removal is also benefiting hundreds of thousands of Australian women.
“Before the Government removed the $450 threshold in 2022, women earning under that amount weekly from each job would receive no retirement savings.”
Equal outcomes for First Nations women
First Nations women deserve equal outcomes when it comes to superannuation, as this demographic faces even more barriers, including language, financial literacy, technology and difficulty of access to engage with superannuation in remote areas.
According to the First Nations Foundation, “Indigenous people often have different kinship structures compared to non-Indigenous people and currently, these structures aren’t recognised by the superannuation industry.”
“This causes a significant challenge when a family member passes away and their superannuation balance isn’t accessible to rightful kin. This issue extends to deceased estates, where kin, despite being culturally appropriate beneficiaries, may encounter obstacles in applying for property inheritance.”
Women in Super’s report says that to improve First Nations’ access to super, funds must implement culturally sensitive protocols. This includes improving cultural awareness of those in the superannuation sector who interact with First Nations communities, standardising forms, and empowering financial counsellors to represent Indigenous clients effectively.