Planner: families on the superannuation back-foot

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Families with children are unfairly disadvantaged when it comes to superannuation according to an experienced financial planner.

Mark Thompson, from Mark Thompson Advisory Services, told Wealth Professional that the superannuation concessional caps also don’t do due credit to families, following an article about Australian women retiring with 40% less in their super.

The hotly debated topic drew comments about whether or not this was correct. Many pointed out that women who are in a partnership in fact share their super accounts, cash and other equities with their spouse.

It was asserted that the real problem lies with one-income families where a parent needs to stay at home to bring up children and is therefore unable to work and contribute to the superannuation concessional cap.

Thompson said the superannuation scheme favours childless partnerships.

“It’s a fact of life that they’re able to put more away individually,” he said. “There’s more pooled money going into their super.”

But Thompson said that this seems unfair considering that raising children is a fulltime and highly expensive job that results in the creation of people who contribute to the community.

Commenters on the story agreed and argued that the contribution caps don’t effectively allow for rebuilding of wealth or the ability to ‘catch up’.

“You reach a certain age and are forced out of the workforce and you don’t have this retrospective to fix anything,” Thompson said. “The government is making people work longer to stop a drain on the community, but at the same time put the bleachers on helping self-funded retirees.”

He said there needs to be more support in superannuation for income-splitting, and stay-at-home parents should be formally recognised in a financial way.

Although he said it may seem ‘radical’, Thompson believes that the tax act should be amended to allow for an income-split with the non-working spouse.

“That’s fair – bringing up children is a responsibility that the whole community benefits from.”


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