Women beginning their careers in 2025 with the new 12% super guarantee rate in place could be hundreds of thousands of dollars better off in retirement, new modelling has revealed.
The new data comes as millions of working Australians start to see 12% super hit their accounts.
The modelling showed women representative of the average HESTA member were projected to retire with $712,000[1] if earning the new higher rate of super for their entire working lives – a $411,000 boost compared to women modelled to retire this year.[2]
HESTA CEO Debby Blakey said the modelling, which factored in time out of the workforce to care for children and part-time work, demonstrated the significant impact on retirement balances from the higher super guarantee.
"The increase in the super guarantee to 12% marked another milestone for Australia's world-class retirement system and has already started to benefit millions of working Australians. This modelling shows its clear value in helping more women retire with dignity into the future," Ms Blakey said.
"Nearly 80% of HESTA's more than one million members are women, working in typically lower-paid industries such as aged care and early childhood education. Many take time out of the workforce to care for children or loved ones, and this further impacts their ability to build adequate super balances.
"The modelling suggests women starting work today could retire with more than double the amount of super compared to female workers modelled to retire this year."
Since 1 July, employers have been required to pay 12% of eligible employees' ordinary time earnings, up from 11.5%. The introduction has also coincided with the super payments on Commonwealth Paid Parental Leave, helping address the fact that Australian mums have missed out on well over $3 billion in super savings at retirement.[3]
While welcoming the early impact of the reforms, Ms Blakey said there remained opportunities to make Australia's super system fairer for women and low-income earners.
HESTA is advocating for an increase to Low-Income Super Tax Offset (LISTO) eligibility to the second marginal tax threshold of $45,000 and lifting the payment amount to ensure low-income earners are not disadvantaged by paying more tax on their super contributions than on their take-home pay.
The Fund is also calling for super to be paid on the Commonwealth Carer Payment, and for indexation of the Work Bonus threshold so it keeps pace with wage rises and the cost of living. This will mean retirees can work more without impacting their Age Pension.
"The lift to the super guarantee and paying super on Commonwealth Paid Parental Leave are fantastic steps to strengthen Australia's retirement system, but there are still policy settings that disadvantage women and those earning lower wages," Ms Blakey said.
