Modelling from industry fund HESTA has revealed that paying super on the Commonwealth Parental Leave Pay scheme and better targeting tax concessions could significantly improve the retirement balances of critical health and community services professionals.
The health industry fund’s 2023-24 pre-budget submission looks at the combined impact of paying super on the Parental Leave Pay scheme, extending the Low Income Super Tax Offset (LISTO) eligibility to those earning up to $45,000. This will bring the offset in line with the current superannuation guarantee (10.5 per cent).
If these key equity measures are introduced, mothers working in vital health and community service sectors could see a superannuation boost ranging from 3.7 per cent to more than 11 per cent, depending on how many children they have.
Around 250,000 HESTA members could see an increase in their superannuation savings if the LISTO eligibility alone is extended.
HESTA CEO Debby Blakey said in a media release on Tuesday that the federal budget was a chance to address the “motherhood penalty”, where women faced a more uncertain financial future because they took time out of the workforce to care for children.
HESTA has outlined five recommendations to the federal government to address persisting inequities in the super system.
These include prioritising paying super on the Commonwealth Parental Leave Pay scheme, extending the LISTO eligibility, and adjusting other tax concessions for high-income earners. HESTA also recommends scrapping super tax concessions flowing to accounts with balances of more than $5 million and introducing a carer’s credit to assist those taking unpaid parental leave in rebuilding their super.
The post Super on PPL drastically improves retirement balances: HESTA modelling appeared first on Professional Planner.