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As the dust settles on the 2022 Federal Budget, others will analyse who the ‘winners’ and ‘losers’ are. However, it was disappointing to see that there were no significant measures to improve the retirement incomes of women. It has been identified that paying super on paid parental leave would have been an important step in minimising the gap between men and women’s super balances. However, it seems that working mothers remain at risk of falling permanently behind financially unless meaningful action is taken to correct this situation.
While many of us thought that we could leave COVID and lockdowns in 2020, the impacts of COVID-19 are still being felt throughout Australia, and throughout the economy. Few have been immune from the effects, with job losses and redundancies widespread. We know that Australian women have been disproportionately hurt by lockdowns, whether it was juggling work obligations while caring for kids; having reduced hours; or being made redundant. You might remember that part of the government’s response was to adjust superannuation early access laws, allowing workers and sole traders impacted by COVID-19 to withdraw $10,000 from their super fund up until 31 December 2020.
Recently, it was reported that women in abusive relationships may have even been ‘coerced’ into withdrawing superannuation. This is obviously deeply disturbing – not only does it highlight the financial vulnerability of women in abusive relationships, but is a sharp reminder of the need to do more to address the structural issues that leave women with substantially less super than men when they reach retirement age. The state of women’s super balance also matters in the short term, because some funds require that you maintain a certain balance, or maintain contributions, in order to keep these insurance policies valid. Many Australian women hold insurance through their super funds, including for total and permanent disability (TPD) insurance. This can be an important source of income if they are unable to work because of illness or injury. This blog explores how women may have been affected by this policy long into the future.
More than 3 million people took out a collective $37.8 billion through the program, with 4.55 million applications received. Of these, 2 million applications were from women with $15.9 billion released. The Australian Institute of Superannuation Trustees (AIST) says if statistics on how many women experienced financial abuse since the start of the pandemic are applied to the early release scheme, it suggests more than 70,000 were the victims of coercion.
While the article notes that superannuation had not historically been a target of financial abuse because it was locked away until retirement, but the early release scheme opened the door to such behaviour.
Now the superannuation sector wants the government to work out the full extent of the coercion to make sure future policies have sufficient safeguards to protect women.
Your superannuation is not just your retirement savings account. The insurance to attached your superannuation, such as income protection or TPD cover, is a critical safety net if you become ill or injured and cannot work.
This means that:
· if you withdraw all or the majority of money from your super account, there may be no funds available to pay insurance premiums and cover will cease, and
· if you are facing longer term unemployment and no contributions are made to your super fund for 16 months, your insurance will be cancelled.
Insurance through super is often the only cover many workers have in the event that they are no longer able to work because of injury or illness. As it is provided to members automatically, many people don’t even realise that they have cover through the super fund. However, we have seen firsthand how important this insurance can be when people no longer have an income – by no fault of their own – but need to access crucial funds for rehabilitation, treatment or everyday living expenses like putting food on the table. If you lose automatic insurance that you already have, there is a risk you may not get it back, or if you do it might not be offered on the same terms. This means there could be more fine print, exclusions and maybe higher premiums.
If you have withdrawn all of your super, or have been made redundant and are worried that you won’t be able to make contributions as required, you can contact your super fund to talk about what options they provide for you to continue your insurance cover. It will be important to understand from your super fund how being out of work may affect any future claims that you make. If you withdrew money from your super during 2020, and now wish to make a TPD or income protection claim, get in touch with Littles for a FREE super claims check today.
Do you have an injury or illness that prevents you from working, or just want to know more about what insurance you have under your super? Get in touch with Littles for a free super claims check. We can help you understand what you’re entitled to. Know where you stand, and get peace of mind.