Practical ways for older women to fill their superannuation gap

There’s a stark reality all of us must face: most women today have super balances up to 25 per cent lower at retirement than men, even when we have comparable roles in the workplace.

This hits hard for women looking at retirement in the next 10 to 15 years, putting them at a severe disadvantage. Any policy change, which will be gratefully received by our daughters, is unlikely to touch the sides for today’s pre-retirees. We look at your options for filling your super gap later in life, or, if you can’t, helping you look into the gap head-on and deal with the fear.

There’s no beating around the bush here – the disadvantage imposed on women by the last three decades of the superannuation system is just plain unfair. And it’s today’s pre-retirees who bear the brunt of it.

Often, women who have dedicated their careers to crucial yet frequently underpaid sectors such as healthcare, education and hospitality find themselves at the greatest disadvantage as they approach retirement. And there are three big reasons why.

The first is the gender pay gap. Many women, even today, and certainly over previous decades, are paid less than their male colleagues, so their superannuation contributions are lower over their lifetime. As a result, their compound investment returns are also lower.

The second is the time we spend not working and not contributing to super. Many women take time out of the workplace to raise their children and care for ageing parents. This is a crucial role that we need people to play in society, and women shouldn’t be disadvantaged for doing so.

And the third is the lack of superannuation attached to maternity leave allowances, which the government has taken steps this week to tackle, announcing that superannuation would be paid on maternity leave provisions from July 1, 2025. It’s a good move, but it doesn’t help women staring at an existing gap.

So what can you do if you are an older woman facing retirement with a lower super balance?

Confront any fear and open your super fund statement. It might seem simple to say this. But many women with lower super balances admit feeling so hopeless about their super that they ignore looking at their statements and super fund’s emails and, as a result, they miss the opportunity to put themselves on a better path.

Mary Delahunty, chief executive of the Association of Superannuation Funds of Australia, said this is the first and possibly the most important step most women can take. “Don’t think that you are alone in the alarming numbers you may see. Take a deep breath … and face into it together with your super fund,” she says.

We can all contribute to creating a fair financial playing field for women so the gap becomes a thing of the past.

Check whether you have more than one super fund and tidy things up. It’s not uncommon for people who have been ignoring their super to have more than one fund.

It might be valid to have two funds if you have been a public service employee and one of them is a defined benefit fund and the other is a more standard defined contribution fund.

But if you hold more than one standard super fund, most people will want to take the time to understand what the balance of each fund is, and what life insurance each contains, and look to consolidate into one high-performing fund with suitable insurance options and competitive fees, chiefly to save yourself in administration costs that will eat away at your balance.

Stop and look at how your super is invested. Super balances grow and multiply over the long term. So the sooner you can grasp and potentially amend your investments to an appropriate level of investment risk and return, the sooner you can benefit from compound returns.

Even a meagre balance at the age of 50 can be improved significantly through sound investment. And it isn’t that hard. Most superannuation funds will provide you with free advice called intra-fund advice that will guide you through your investment mix and help you make informed changes.

Look at how you might be able to lift your super balance. As you start to be able to see your retirement in the distant or not-too-distant future, take some proactive steps to enhance your super balance.

Explore opportunities for additional contributions, like salary sacrificing or making either concessional voluntary contributions or non-concessional. Even small, regular contributions can make a significant difference over time.

It’s also worth understanding the potential benefits of government co-contributions for low or middle-income earners and considering your options for spousal contributions too. An adviser from your fund can help with this.

There are numerous reasons why women – especially older women – are more disadvantaged when it comes to super.Credit: Getty

Understand your rights and claims on superannuation in a divorce. While superannuation is typically considered individual property, it becomes a shared asset in a divorce, similar to the house. So it’s crucial to be well-informed about your rights and entitlements regarding superannuation during divorce proceedings.

Get some legal advice to understand the potential division of superannuation assets and explore options such as a superannuation split or a binding financial agreement. This is one of the ways many women have suffered from superannuation disadvantage, and it does not have to be the case if you are proactive in managing it.

It’s tough to stare at the gap head-on, but it’s worthwhile. It’s also important to raise our daughters to understand superannuation better, so they take contributions more seriously than previous generations of women and fight for what is fair.

We can all contribute to creating a fair financial playing field for women so the gap becomes a thing of the past.

Bec Wilson is the author of bestseller, How to Have an Epic Retirement. She writes a weekly newsletter at www.epicretirement.net and is the host of the Prime Time podcast.

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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