In a study released by KPMG, the big four consulting firm proposes that the primary carer – usually a woman – should receive a rebate on the 15 per cent super contributions tax paid on contributions made for up to five years following the period out of the workforce.

In effect, that would mean the primary carer would be compensated for superannuation lost while at home caring for children.

While there are many measures that show Australia has a long way to go to address gender inequality, one notable measure is the superannuation gap.

Currently, women in Australia retire with 47 per cent less superannuation than men, despite an average life expectancy of five years longer.

The median superannuation balance for men aged 60-64 years is $204,107, whereas women in the same age group earn $146,900, resulting in a gap of 28 per cent. For the pre-retirement years of 55-59, the gender gap is 33 per cent, and in the peak earning years of 45-49, the gender gap is 35 per cent.

As such, KPMG believes the primary carer rebate would help equalise pay and superannuation for women who are currently losing out on super contributions to care for children.

Linda Elkins, KPMG partner and national sector leader asset and wealth management, said this approach could enable the carer to catch up on half of the mandatory concessional contributions that would have been made had s/he not taken time out of the workforce.

“The aim is to support the primary carer in catching up to the extent of a maximum of 50 per cent of the contributions that might reasonably have been made, had they continued to work as they did before leaving the workforce,” she said.

KPMG has also proposed a further three methods to help women bridge the super gap, including support for women in lower-income jobs via the introduction of a “top-up” system for primary carers (not on a co-contribution basis), which would be directed to accounts of those accessing the Paid Parental Leave scheme.

According to the firm, the impact of a $500 or $1,000 annual top‑up should be modelled by the Commonwealth Treasury.

Another options is the removal of the five‑year limit on utilisation of concessional caps for
years spent as a primary carer, allowing these individuals to have more flexibility to top up their balances and make up for gaps in work.

Moreover, KPMG proposed the creation of a “Primary Carer Supplementary Concessional Cap”.

Currently, an individual can have concessional contributions of up to $27,500 per annum.

A taxpayer with a total superannuation balance of less than $500,000 on 30 June of the previous financial year can apply any unused cap for up to five subsequent years.

Under the proposed reforms, primary carers would benefit from having additional “catch up” capacity that is not subject to the five‑year time limit.

“Options that help primary carers make additional contributions in excess of the $27,500 cap will not greatly help a person on $60,000 a year.

“We believe a more targeted approach will prove more successful, and so our proposal is based on strict eligibility,” Ms Elkins said.

Stressing the importance of helping women catch up, the KPMG noted that individuals with low superannuation balances are more likely to rely on the age pension in retirement.

As at December 2020, 55 per cent of those collecting the full pension were women.

“Financial insecurity in retirement contributes to poverty and housing insecurity of older women in Australia,” said Alison Kitchen, chairman of KPMG Australia.

“Our broad commitment is to help change that situation for the better by working with stakeholders to support targeted policy reform.”