A new report warns future increases to the compulsory superannuation guarantee will widen the gender gap in retirement incomes.

Instead, the Grattan Institute calls for better-targeted super tax breaks.

Brendan Coates, a fellow at the think tank, says women save less via super because they earn less, while at the same time generous super tax breaks are predominantly used by older, high-income men to reduce their tax bills.

He says there is not a strong case to raise the compulsory super guarantee to 12 per cent, as legislated.

The present rate will remain at 9.5 per cent until 2021, then increase by half a percentage point each year until it reaches 12 per cent in July 2025.

He says higher contributions will ultimately be funded through people’s wages, which means lower living standards for workers, especially those of low-income earners, the bulk of whom are women.

‘Raising the super guarantee to 12 per cent could also hurt the retirement incomes of existing pensioners, by suppressing wages indexation of the age pension,’ Mr Coates says in a report that will be presented to a conference in Perth on Friday.

Instead, better targeting of super tax breaks could free up revenue to provide more targeted support for retirement incomes for people who need it.

Mr Coates also calls for a boost to the age pension for retirees who do not own their own home through the commonwealth rent assistance program, to alleviate poverty in retirement.

‘Single women who are retired and do not own their own home are the group most likely to rely almost solely on the age pension and are at the greatest risk of poverty in retirement,’ Mr Coates says.

A targeted $500-a-year boost to rent assistance for age pensioners would cost $250 million a year.


* Contributions from pre-tax income should be limited to $11,000 a year as 80 per cent of contributions above this level come from people likely to retire with enough assets to be ineligible for an Age Pension even without such big super tax breaks.

* Contributions from post-tax income should be limited to $50,000 a year.

* Earnings in retirement – presently untaxed for super balances up to $1.6 million – should be taxed at 15 per cent, the same as superannuation earnings before retirement.