CHART: Older women will feel the pain from the latest super changes

Sean Garnsworthy/Getty Images

Women aged 50 and older are being penalised the most from the federal government’s superannuation changes announced in the budget, according to analysis by the National Centre for Social and Economic Modelling (NATSEM).

The budget cut the pre-tax amount which can be put into super to $25,000 from $35,000 for those aged over 50s and from $30,000 for those younger than that.

However, the modelling shows this decision will have a larger impact on women aged 50-64 than on men.

This is a time of life when women tend to put more into super, catching up on what they couldn’t do earlier in life because of family responsibilities.

“If women are penalised for doing this, then they’ll retire with a much lower balance overall, having contributed less when aged 30 to 49; and discouraged to make up payments from concessional contributions when aged 50 to 64,” says NATSEM Professor Robert Tanton at the University of Canberra.

“We expect that this change will reduce the size of women’s superannuation balance over the long term, effectively leaving more women at risk of not having enough savings and possibly turning to some part of the age pension in retirement.”

The modelling at NATSEM shows women pay proportionally more tax than men because of the super changes, as this chart shows:

Source: NATSEM

The analysis found that the changes mean women over 50 will pay about 1% extra of their income each year in tax, while men pay less than half that at 0.42%.

“This is an example where the Government has suggested a policy for a perfectly good reason (to reduce high income earners contributing large amounts in concessional superannuation contributions), but the unintended consequence is that a group of the population is greatly affected,” says Professor Tanton.

He suggests an income cut off for higher concessional contributions; a $30,000 cap for those earning less than $150,000 and a $25,000 cap for those earning more than $150,000.

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