The gender superannuation gap - without policy action now, women will retire with far less than men for decades to come

Posted: Tuesday 10 March, 2015

The current 19% pay gap between women and men’s wages in Australia is translating into a yawning superannuation gap of 47%.

Women are currently retiring with $90,000 less than men, and 29% of women over 65 are living below the poverty line.

“Current settings around retirement income policy are failing to address the super gap, with projections showing that women will continue to retire, on average, with 39% less than men in 30 years’ time,” said Robbie Campo, Deputy Chief Executive of Industry Super Australia.

“Too many women are still receiving a smaller pay packet - and therefore a smaller amount of super - than their male counterparts, for performing the same or comparable work.

“Because the super contribution is invested and compounds over the long term, the pay gap is entrenching an even bigger super gap for women,” said Ms Campo.

“Our gender pay gap has been stuck between 15% and 19% for two decades, so several generations of working women are already facing a significant disadvantage in their retirement savings.”

The super gap in 2012 was 47% with average superannuation balances at the time of retirement $105,000 for women and $197,000 for men – a difference of $92,000.

In 2030, the gap is expected to be 39% with average balances projected to be $262,000 for women, and $432,000 for men – a difference of $170,000.

A number of factors contribute to worse retirement outcomes for women compared with men:

  • Because super contributions are based on a percentage of what you earn, women’s fragmented patterns of paid work associated with having children puts a very significant dent in their super accumulations.
  • The majority of part-time and casual workers are women (typically lower paid positions)
  • Women typically retire earlier than men and live longer – up to 4.4 years longer for a female born today
  • the regressive nature of tax concessions and abolition of the Low Income Super Contribution from 2017 will mean that half of all working women pay more tax on their super contributions than on their take home pay
  • with significantly less opportunity to accumulate retirement savings, women are more likely to be fully dependent on the age pension, so are disproportionately impacted by changes to the age pension.

  “As a starting point, to ensure that women are not left even further behind in terms of retirement savings, the Low Income Super Contribution should be retained beyond 2017,” said Ms Campo.

“The LISC ensures 3.6 million Australians earning less than $37,000 receive a tax concession of up to $500 a year on their super contributions. Given that the rest of the workforce receives tax concessions on super contributions, it is nonsensical that the lowest paid, most of whom are women, pay more tax on their super than on their take home pay.”

Nearly half the women (45%) in the Australian workforce are eligible for this payment which will make a huge difference to their nest egg in retirement years.

“Policy action to close the super gap should be a top, bipartisan priority for our law makers as they consider the data and findings of the Intergenerational Report and prepare for the Tax White Paper,” said Ms Campo.

“In a wealthy country like Australia, no woman who has spent her life working and caring for others should have to retire in poverty.”

Media contact: Phil Davey 0414 867 188

For more on the Super Gap, go to