As a result of the federal budget, women over 50 who earn more than $110,000 will be less likely to make concessional contributions to super, new modelling shows.
The National Centre for Social and Economic Modelling (NATSEM), based at the University of Canberra, has released a paper on the impact of the 2016-17 federal budget, which found women will be disproportionately affected.
The modelling took into account the proposed lowering of the concessional contribution cap to $25,000, the lifetime cap of $500,000 for non-concessional contributions, and the extra 15 per cent contributions tax for people earning more than $250,000 (reduced from $300,000).
The NATSEM paper found that women between 50 and 64 would see a 0.97 per cent increase in their tax paid as a result of the changes, compared with 0.42 per cent for men aged 50-64.
The difference exists because women who are 50-64 earn a lower average income than men, so while males pay more tax as an absolute amount, women pay more as a proportion of their overall income, according to NATSEM.
The median gross income of those affected is much lower for women in every age group: for women aged 50-64, it is $112,732 ($229,441 for men) and for women of 65 or older it is $79,602 ($161,914 for men).
"What these results suggest is that this policy is going to discourage female workers aged 50-64 and [aged] 65 and over [from] contributing concessional amounts to superannuation, mainly due to the proposed tax on concessional contributions over $25,000 per year," said the report.
"The age groups affected most are at a stage in their lives where they should be thinking of contributing more to superannuation, and those in our modelling are earning enough to be able to do this, and should be encouraged to do it as contributions at the family building stage (30-49) are usually lower due to part time work and caring responsibilities.
"Unfortunately, the contributions cap will discourage females in these age groups [from] contributing more to their super," said NATSEM.
SUBSCRIBE TO THE IFA DAILY BULLETIN
- 16 Aug 2017UBS appoints head of wholesale distributionBy Staff Reporter
- 17 Aug 2017Formerly banned adviser to face further ASIC chargesBy Staff Reporter
- 16 Aug 2017Challenger announces ‘strategic relationship’ with Japanese insurerBy Staff Reporter
- 16 Aug 2017Income protection insurance launched for on-demand workersBy Staff Reporter
- 17 Aug 2017New evidence for self-licensing surgeBy Aleks Vickovich and Linda Santacruz
- 16 Aug 2017RegTech to reduce adviser misconductBy Aleks Vickovich and Larissa Waterson
- view all