Couples could split their combined retirement savings without being slugged additional tax under a plan to address gender inequity in superannuation, proposed by Liberal senator Jane Hume.
Under the bold plan, the partner with the larger superannuation balance could top up their spouse’s savings using funds already locked away for retirement. Separate from new contributions, it would help close the gap in savings between men and women at retirement, sometimes more than 25%, due to the time women take away from the workforce to raise children.
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Hume, a former superannuation and women’s economic security minister, will introduce a private senator’s bill on Thursday, coming as the Coalition tries to reconnect with female voters after its disastrous 3 May election drubbing.
Previously the party’s finance spokesperson under Peter Dutton, Hume’s demotion to the backbench by the opposition leader, Sussan Ley, baffled some Liberals.
Rollovers would be limited to the difference between the smaller balance amount and the existing general transfer balance cap for superannuation, currently $2m. Alternatively, a couple could use rollovers to make their account balances even.
Tax law would be changed to ensure rollovers could not happen once a superannuation account holder enters the pension phase, and to allow rollovers as a one-off payment or as a regular redistribution mechanism.
No additional tax would be paid on the rollovers, because the funds would maintain their original tax treatment.
Hume said the sacrifices some partners make to raise children benefit both people in a relationship.
“When one partner, typically the mother, takes time away from work to raise children, her superannuation savings often halt for years, even decades, while her partner continues to grow,” Hume said.
“This is the ‘motherhood penalty’ in action, leaving women financially vulnerable in their later years.”
At 47.8%, women aged between 55-59 have the biggest superannuation saving gap with men. In the 50-54 and 60-64 age brackets, the gap is 42%, according to the government’s Workplace Gender Equality Agency.
Existing rules allow one spouse to make voluntary additional contributions to their partner’s superannuation fund, but take-up was as low as 1.1% in 2021-22 in part due to low awareness of the rules.
Hume said existing rules allow equitable splitting of retirement savings during divorce proceedings, but structural reform was needed to ensure they were voluntary and accessible across the system.
“This bill explicitly recognises the economic partnership at the heart of most families,” she said. “It empowers couples to plan for retirement together, allowing a more even distribution of superannuation during the accumulation phase.
“Financial security in retirement should reflect a lifetime of shared contributions, not just paid employment. That is what this bill aims to fix.”
Labor has left open the possibility of more changes to superannuation rules after last month’s economic reform roundtable. The treasurer, Jim Chalmers, is yet to finalise a deal with the Greens on winding back concessions for accounts with balances over $3m, and a wider deal could be possible.
Changes to promote intergenerational fairness in the tax system are high on Labor’s priority list.