AMP analysis finds women starting a family benefit most from government’s low-income super contribution

AMP research has revealed women are the biggest recipients of the low-income super tax offset (LISTO) with the number of females eligible for the tax break increasing significantly around the time they start having children.

Analysis of 174,000 customers’ data over a four-year period revealed a significant jump in the number of women receiving the low-income super tax offset between the ages of 25 and 33.

The low-income super tax offset is a government superannuation payment of up to $500 per year to help low-income earners save for retirement.

The research found:

• Women between the ages of 18 and 54 were twice as likely to receive the low-income super tax offset than men.
• Of the 174,000 customer accounts analysed, 15 per cent per cent had received the low-income tax offset.
• There was a high proportion of men and women aged 18 to 24 eligible for the tax offset.
• The peak time men were eligible for the low-income super tax offset was age 19.

AMP Technical Strategy Manager John Perri said the results showed the tax offset was helping contribute to the super balances of low-income earners.

Mr Perri said: “We know women retire with less super than men due to a range of factors. Women are more likely than men to take time out of the workforce to care for small children and often return to part-time lower paid roles, where they haven’t had the benefit of pay increases and promotions while they’ve been on leave.

“Although the low-income tax offset is a small amount, every little bit counts when it comes to increasing your superannuation balance. Super is built on compounding interest, so the more you contribute at an early age, the more likely your balance will grow over time, subject to market fluctuations.

“It’s interesting to see Generation Z are also benefiting from the low-income tax offset. These Australians have time on their side when it comes to saving into super. A $500 tax offset today could be worth significantly more when you consider the impact of compounding interest over the next four or five decades.

“The low-income super tax offset is a payment designed to help people earning under $37,000 or less save into super. Concessional (before tax) super contributions are taxed by the government at 15 per cent. The low-income tax offset effectively provides a tax refund for low income earners straight into their super fund up to $500 per financial year.

“Consumers don’t need to do anything to claim the low-income super tax offset. It happens automatically when they lodge their tax return, providing their super fund has a copy of their tax file number.”

Research methodology:

AMP’s research and analytics team studied the data of 174,000 employed customers over a four-year period. The customers had recently consolidated their super.

The analysis includes the crossover period where the government replaced the low-income super contributions (LISC) with the low-income super tax offset (LISTO).