It is well known that the current superannuation system indirectly discriminates against women. For example, women spend less time in the workforce due to their disproportionate share of the domestic and childcare labour burden and consequently have less super to rely on for retirement, and the gender pay gap directly translates into a super account balance gap.
This indirect discrimination has serious consequences for women, with, for example, 40% of single retired women living in poverty.
Fixing the gender pay gap and the unequal domestic/childcare labour burden is not simple, and even if it was there is a lack of political will to fix it.
As the government has absented itself from any effort to make super fair, one might think the government was happy for individuals to have a go at making their own super fair, right? So their wife could get a go at a fair retirement income, right? Helping the government maintain budget surplus by reducing age pension expenditure, right?
Let me tell you a story.
As paid primary parental leave is generally not available to men, the financially prudent option for my wife and I with our children was for my wife to take all the primary parental leave. As I was aware of the negative impact this had on my wife’s super, and her career more generally, and that nothing would be done about this negative impact unless I did it, I decided to transfer her some of my super.
The idea was that once she returned to work after our final child I would transfer enough of my super that each of our super balances would be equal. Thereafter, our super balances should remain approximately equal until retirement (if anything I would be worse off: my wife’s income is, and is likely to remain, higher than mine).
Pretty straightforward I thought: add both our super balances, divide by two, transfer however much of my super was over that number to my wife. I envisaged an online form and ten minutes effort. The same as for adjusting my super investment choices, taking up insurance within super, or any interaction of any kind I might need to have with my super fund.
If only. First, I had to complete a PDF form, which solely required from me information already held by my super fund. Accompanying this form, I had to provide several identifying documents (birth certificate etc.), none of which had ever been required by my super fund for any other reason, including the creation of the super account itself.
Then, I discovered I had to do this twice. You are only allowed to transfer 85% of the total of the most recent financial year’s ‘concessional contributions’ (for most people, the super your employer has paid you).
For me, the total required to equalise my wife’s super with mine was twice that amount. So, I had to wait until the next financial year to make the second application, as you can only apply to transfer super to your spouse once per financial year.
When I made this second application, it had to be from scratch, including resupplying all the identity documents. Altogether, what should have been a ten minute exercise and a tiny win for gender equality was a six month headache.
What I wanted to know, and what led to this article, was why? Maybe there is a good reason transferring super to your spouse is hard.
Perhaps unsurprisingly, I found there is not a good reason. There are three bad reasons.
First, the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) requires all the identity document malarkey. When asked, my super fund, the Association of Super Funds Australia, and Senator the Hon Jane Hume (the Minister for Superannuation, Financial Services and Financial Technology) did not provide any examples of spousal super transfers being used to launder money or finance terrorism, nor did they explain how spousal super transfers could theoretically be used to do so.
Second, although the 85% rule was sensible (15% tax is taken from employer contributions, so the 85% rule simply limits you to transferring super you actually received), there was no basis for imposing any limit other than 85%. I should have been able to transfer any amount up to 85% of my total employer contributions ever received, avoiding the need to make a second application.
Third, the only reason given for limiting spousal transfers to once per financial year was to limit the administrative burden on super funds.
I asked Senator Hume if, to make super fairer and more gender equitable, she intended to remove the red tape imposed by the AMLCTF Act and/or abolish the transfer cap of one year of employer contributions. Senator Hume did not respond.
Fortunately, my story has a happy ending. I eventually managed to transfer my wife enough of my super that our balances are equal.
Unfortunately, for most women there is no such happy ending – not only does the government decline to pursue gender equitable super policy, it makes it as difficult as possible for individual citizens to pursue gender equitable super within their own circle of influence.
Frankly I’m not sure what can be done. As it stands, women will continue to be disproportionately insecure, poor and homeless in their retirement. It’s not good enough.