The superannuation system continues to fail small business owners by limiting lump-sum contributions from those who can reasonably top up their super only after the sale of their business, the sector’s ombudsman, Kate Carnell, says.

Super is often the last priority of business owners, who struggle to cover the rent and pay themselves a living wage, Carnell told the Women, Super and Wealth Summit in Sydney on Thursday. When they are eventually in a financial position to pay into their super, often later in life, the annual limit makes it difficult for them to catch up.

“The comment about getting money into super early is absolutely true if you’re employed, but not if you’ve just started a small business and are in the less than $18,000 taxable income space or, for that matter, the under $37,000 taxable income space – and that’s a very large percentage [of people],” she said.

“I think some of the proposals for top ups and so on are a good idea…but I think it’s got to be even more flexible because, as a small businessperson, the time when you can put money into super is usually when you sell your business or have an unusually good sale or something else unusual happens,” she explained. “You’ve got to be able to top up your super at that point in time, and the system is too inflexible to allow that to happen.”

Carnell said the onus is on legislators to increase contribution flexibility for owners of small businesses – almost half of which have women listed as a proprietor, recent figures show. One solution would be allowing spouses to compensate for their partner’s years out of the workforce by making regular contributions to their super, she said.

“We want more people to be able to fund as much of their retirement as possible, so we’ve got to be able to make it simpler for small businesses to put sometimes lots of money, very irregularly, into their super funds,” she added.

Conexus Financial, the publisher of Professional Planner, was the official media partner of the Women, Super and Wealth Summit 2017. The Summit was jointly presented by the SMSF Association and Financial Services Council, with the support of the Commonwealth Bank.