Low-income workers could net up to $60,000 more in superannuation savings by retirement under landmark changes announced by the federal government this week.
The government will increase the low-income superannuation tax offset (LISTO) by $310 to $810 and raise the eligibility threshold from $37,000 to $45,000 from 1 July 2027.
It says the reform will help deliver a more secure retirement for 1.3 million Australians, of which about 60% are women, with the total number of Australians becoming eligible for LISTO increasing to 3.1 million. It will benefit workers with incomes between $28,000 and $45,000, with an average increase in the LISTO payment of $410. Workers could benefit around $15,000 at retirement, depending on an individual’s income over the course of their career, the government added.
According to Super Members Council modelling, the changes could mean some lifetime low-paid workers could have up to $60,000 more in their super savings by retirement by lifting the LISTO to cover the first two tax brackets.
The ACTU welcomed the changes to LISTO, which it says was designed to ensure workers on low income paid less tax on their super than they did on their take-home pay, however, hadn’t been adjusted to keep up with the rest of the tax system.
“Super has always been about everyone having a dignified retirement, not a tax minimisation scheme for the ultra-wealthy,” Secretary Sally McManus says.
“The big winners in this announcement are around one million low-income Australians, who are mostly women, working part-time, and who will now have more money for retirement.”
Super fund HESTA said the important equity measure was a significant step forward in addressing the gender super gap that still sees women retire on average with about 25% less super than men.
Last financial year, it says around 130,000 HESTA members received a LISTO payment, but more than 70,000 members earning between $37,000-$45,000 missed out on $35 million in super contributions ‘refunds’ because of the LISTO misalignment with tax brackets.
