Closing the super gap for parents, carers


KPMG has proposed superannuation reforms targeted at-home carers and recipients of paid parental leave to help close the gender gap.

The KPMG Towards Gender Equity in Retirement report recommended the government consider adding superannuation contributions to the Commonwealth Carer Payment.

The consultancy firm said the "modest measure" would be an immense boost for recipients of the Carer Payment - more than 70% of them women - who provide constant care to people with disability, severe illness, or frail aged.

paid super for stay at home mums

For individuals who begin providing care at 35 years of age and continue for the subsequent 15 years, the report found that including Superannuation Guarantee (SG) contributions in the Carer Payment would increase their superannuation balance at retirement by $123,000.

KPMG economic analysis revealed that such a boost in retirement savings could be attained for a budgetary cost of $45,500.

KPMG Australia head of superannuation Linda Elkins says: "Not only would KPMG's proposal properly recognise and value the role home carers play - and help close the gender superannuation gap, given most of them are women - but it could be done with a cost-neutral, or even positive, impact on the Budget over time by giving incentives to people to take on caring roles."

"It would be a huge boost to people who help the federal budget by providing a valuable service to society at a much lower cost than if the people they look after went into formal care."

Beneficiaries of the Carer Payment also receive the Carer Allowance and the Carer Supplemental, combining for a total of $29,624 per annum. This contrasts with the $42,255 annual income received by a minimum wage worker. The cost differential becomes even more pronounced when considering government-funded formal care facilities such as residential aged care homes and hospitals.

Subsequently, KPMG says incentivising informal caregiving through the addition of SG contributions, could lead to considerable net budgetary savings. Additional savings could also emerge from a reduction of Age Pension payments due to increased superannuation balances for carers.

Based on the 2023-24 budget papers, the initial annual cost of adding SG contributions to the Carer Payment at a rate of 12% would be around $944 million. By the 2026-27 financial year, this cost is forecast to balloon to $1.1 billion.

However, when considering the high costs of formal care, each carer receiving the Carer Payment contributes to net budgetary savings.

"If those receiving care from recipients of Carer Payment were instead placed into formal care, such as high-care aged care facilities for frail aged people and NDIS service provision for people with a disability, the cost to the federal budget of that service provision would rise," the report says.

"Formal care is more costly to the budget because carers are paid at award or above-award wage rates, whereas recipients of Carer Payment are paid a much lower rate."

KPMG's proposal aligns with its previous 2022 recommendation of introducing a Carer's Income Tax Offset (CARITO). This tax credit, awarded upon re-entry to the workforce, incentivises carers by recognising the value of their unpaid work.

Despite these initiatives, KPMG acknowledged that many carers may not be able to re-join the workforce due to their commitments. It's in these cases, the application of the SG to the Carer Payment could help.

"It's a highly equitable policy, since recipients of the Carer Payment must satisfy a means test and therefore are on low incomes," Elkins says.

"People who carry out unpaid caring work pay a price not only in terms of lost earnings and missed career opportunities during their time as carers but also in the form of a less comfortable retirement in the future."

Meanwhile, KPMG renewed its call for the SG to be applied to Commonwealth Paid Parental Leave (PPL) to continue addressing the gender superannuation gap resulting from the societal undervaluations of unpaid care work, predominantly performed by women.

"KPMG continues to believe that since the Commonwealth pays PPL to eligible workers - and compulsory super contributions rightly form part of remuneration - then it follows logically that the Commonwealth should make SG contributions under its PPL scheme," Elkins says.

"We renew our call for the government to include SG contributions in PPL in future budgets."

This article first appeared on Financial Standard

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Andrew McKean is a journalist at Financial Standard. He covers superannuation, wealth management and financial advice. Prior to this he has worked freelance for not-for-profit organisations and corporate educators. Andrew has a Bachelor's degree in journalism and non-fiction writing from Macquarie University. Connect with him on LinkedIn or Twitter.