KPMG proposes superannuation rebate for primary carers

30 August 2021 2 min. read

In an effort to help bridge Australia’s superannuation gender gap, KPMG has proposed a new rebate policy for individuals who have missed out on contributions lost to childcare.

Professional services firm KPMG has made its latest call for greater gender equality in Australia with a proposal to amend superannuation contribution rules for time ‘lost’ to childcare. The adjustment would see primary carers offered a rebate on the 15 percent Superannuation Contributions Tax (SCT) for up to five years following their absence and return to the workforce.

“Time spent out of employment is a major contributor to unequal levels of superannuation balances, as women miss out on super contributions in some of their peak working years,” said KPMG Australia Chairman Alison Kitchen. “We propose the introduction of a targeted rebate of tax paid on contributions for primary carers as a mechanism to compensate for ‘women’s time out’.”

The Gender Superannuation - KPMG

According to the consulting firm, the median superannuation balance for men aged 60-64 years in Australia is a shade over $204,000, almost $60,000 more than the $146,900 figure for women of the same age group – or a gap of 28 percent. In the peak earning years from 45 to 49, that gender gap gets out to 35 percent, and persists at 33 percent for the pre-retirement years of the 55-59 age-group.

Kitchen notes that while there are a range of reasons for the discrepancy, time spent out of the workforce to care for young children remained one of the biggest factors, with the issue of lower super balances exacerbated by the longer life expectancy of women. She adds, “Financial insecurity in retirement contributes to poverty and housing insecurity of older women in Australia.”

Under KPMG’s proposal, the time limited rebate on the Superannuation Contributions Tax would be claimed through the individual’s personal income tax return, with a number of strict eligibility requirements. These include the child cared for being less than 6 years of age during the claimed period (or under 16 in the case of disability). Existing fund balance limits would also still apply.

“This approach could help close the gender super gap in a significant way,” said Linda Elkins, KPMG National Sector Leader for Asset & Wealth Management. “The aim is to support the primary carer in catching up to the extent of a maximum of 50 percent of the contributions that might reasonably have been made, had they continued to work as they did before leaving the workforce.”

The firm also noted that lower income earners struggled to make use of concessions under the existing scheme. “Options that help primary carers make additional contributions in excess of the $27,500 cap will not greatly help a person on $60,000 a year,” Elkins concluded. “We believe a more targeted approach will prove more successful, and so our proposal is based on strict eligibility.”