Until recently, I didn’t get it.
I didn’t understand why so much was made of women’s lower average super balances. You see I work quite closely with some outstanding family and estate lawyers, so I am familiar with the mechanisms that transfer super from wife to husband, or vice versa, in the event of divorce, separation or death. If balances aren’t even before these processes start, they will definitely be that way by the end.
One of the marketing problems that superannuation has it’s not very tangible for those people who don’t work daily in financial planning or a super fund. But now I realise that by discounting the value of whose name the super is actually held in, I was only contributing to that lack of tangibility that encourages disengagement.
The super statement comes in the mail addressed to him. It’s easy enough to make a change to the account, in fact you can do it online. If you’ve forgotten the login that’s no problem, we can send a password reset – to his email.
Old enough to draw on your super and want to make an additional withdrawal? Well sure, just have your husband / partner sign this form, seeing as the account is in his name.
Not many men I know love the idea of going to their wife or partner and asking for cash to go out and spend. But by holding all the super in one name, we’re putting women in this position.
Imagine what we’re doing to the proposition of retiring from paid employment as well. The result we’re achieving for the women who are our clients is that they go from a sense of independence – receiving an income they earn and control into their own bank account – into a sense of dependence, drawing income from assets that are in their husband or partner’s name, and over which they have no easy control.
So now I’m advocating to my clients that they make use of the humble spouse super contribution splitting option.
Spouse contribution splitting has a bit of a funny history in superannuation. For years it was cried out for, because you see there used to be limits on the amount of super you could withdraw tax-free, so the idea that all the super would end up in one spouse’s name was considered a horrible prospect. Not because of the inequality mind you, but because it meant paying more tax!
Finally, from 1 January 2006, spouse contributions splitting became available, a great tool to reduce tax on super. Then a short 18 months later, all those super withdrawals became tax-free after 60, so instead of looking to split contributions we were now trying to move as much as possible into the name of the member of the couple closest to age 60. We stopped looking so much at contribution splitting, but the option remained.
So it’s time to bring back the contribution split as a tool for equality in balances.
If you have a spouse who has taken some time out of paid employment, to look after kids, how about splitting the super contributions with them 50-50? That way both of you get to see a boost in your super balance.
If you’ve made a long term commitment to a husband, wife, partner or significant other, and their balance is lower, why not split some contributions their way?
It’s not about tax advantage, it’s about bringing a bit of equality into account balances. That equality will drive a sense of independence and control, which are always great contributors to making smarter money choices.