Closing the gender superannuation gap

THE GENDER SUPER GAP

Due to the gender pay gap and being more likely to have fragmented work patterns, women are retiring with less super than men. The super gap needs to close.

See for yourself

Average super balance for a year old

Men

Men

Women

Women

$00,000

Check again >

For the time being, there are things you can do to help improve your balance at retirement.

boost your super  8 ways to boost your super

Mean superannuation balances. ASFA March 2014.

Closing the gender superannuation gap

Australia’s gender pay gap has been stuck between 15% and 19% for two decades with women still paid less than men in many industries, despite more modern laws and changing attitudes.

Currently stuck at 19%, the pay gap translates into a much bigger superannuation gap of around 47% when women retire. This lack of retirement savings is largely the result of smaller pay packets compounded by broken work patterns when women take time out to care for others, especially children.

On average, women currently retire with $90,000 less than men. 

Several generations of working women now remain significantly behind in their retirement savings because the pay gap has persisted so long. Social research company Ipsos reports that women in their late 30s and 40s are especially anxious they will not have enough super to fund their retirement.

Unless we tackle the issue head-on, by 2030 the retirement income gap is still expected to be 39% with average balances projected to be $262,000 for women and $432,000 for men.

The sooner we can rebalance our super system to make it fairer for all, the better the long-term retirement outcomes for all Australians.

What are the problems?

A number of factors contribute to poorer retirement incomes for women:

  • Women are more likely to have fragmented work patterns of paid work when women take primary responsibility for family care. For example, taking 5 years off work from age 29 – 34 is estimated to shave $100,000 off women’s average retirement savings.
  • A majority of part-time and casual workers are women in generally lower paid positions.
  • Women disproportionally work in administrative roles, community services and sales which historically pay less than male dominated occupations.
  • Fewer women occupy senior executive and board level positions.
  • Women typically retire earlier than men on average and live longer than men - up to 4.4 years longer for a female born today.

What are the solutions?

It isn’t all doom and gloom - there are policy solutions the government can implement to improve retirement outcomes for women.

  1. Reinstate the Low-Income Super Contribution (LISC). The LISC is a rebate of up to $500 for part-time and low income earners who pay more tax on super than their personal income. However, in 2017 the LISC is due to be abolished. This will hurt the retirement savings of 45% of all working women who receive the LISC, further reducing their super balances by around 10%. 

  2. Recalibrate tax concessions on super to benefit the lowest paid. Currently, tax concessions on super flow to the highest income earners, who are mainly men. The lowest paid, mainly women, receive no tax break and this puts a large dent in their overall super savings. Super tax concessions must be rebalanced to support the lowest paid as they build their retirement nest egg.

  3. Introduce a ‘Super Seed’ contribution for those on lower to middle incomes. The Super Seed is a one-off contribution of $5000 to those who are at risk of having lower super balances when they come to retire. The Super Seed wouldboost their retirement savings and leverage compounding interest to maximum effect. It would target lower and middle income Australians aged 27-36 and particularly women, allowing for their superannuation nest egg to continuously grow despite being on a lower income or having fragmented work patterns.

  4. Raise the compulsory super guarantee to at least 12%. Under Australia’s superannuation law, your employer must pay the equivalent of 9.5% of your salary into a super fund. This is called the Super Guarantee scheme. Combined with properly targeted tax concessions and other measures such as Super Seed, an increase in the Superannuation Guarantee would help build women’s the retirement savings. However, the increase in the Super Guarantee from 9.5% to 12% has been delayed until 2025.

  5. Reform the age pension. Super and pensions are two sides of the same coin for millions of workers who will rely on both for a comfortable retirement, especially women. Recent changes to the age pension have created a disincentive for people to save more super and will leave millions of middle and lower income earners short-changed in retirement. These changes should be reversed.

What can I do?

Boost your super

Despite the gender super gap, there are steps you can take to boost your own your super so you’ll have more in retirement. And remember, the younger you start, the more you’ll have. To find out more visit here

 

THE GENDER SUPER GAP

Due to the gender pay gap and being more likely to have fragmented work patterns, women are retiring with less super than men. The super gap needs to close.

See for yourself

Average super balance for a year old

Men

Men

Women

Women

$00,000

Check again >

For the time being, there are things you can do to help improve your balance at retirement.

boost your super  8 ways to boost your super

Mean superannuation balances. ASFA March 2014.

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