Banks, unions, women's advocates unite in call for super payments on parental leave

Banks, state governments and superannuation funds are among those calling on the federal government to pay super on paid parental leave amid new data showing the gender super gap almost triples before the average woman turns 40.

At the age of 25, the average woman has 9.1 per cent less in super than her male counterpart, but by the time she turns 39, the gap has grown to 24.6 per cent.

Paying the super guarantee on paid parental leave has been suggested by several groups.Credit: Louise Kennerley

This sharp divide only worsens later in life, with the gap peaking for average workers aged 55 to 59 years old at 40.4 per cent, the research from Industry Super Australia shows, leaving men retiring with $90,000 more in their super on average.

Women in Super, Industry Super Australia, AMP, COTA Australia, the Financial Services Council, the Victorian government, the West Australian government, Maurice Blackburn lawyers, the Australian Council of Trade Unions and Chief Executive Women are among those who have called on the federal government to consider requiring the super guarantee to be part of paid parental leave in submissions to the retirement income review.

For a nation that prides itself on fairness and equity, such outcomes are unacceptable.

AMP Capital submission to the retirement income review

A Senate inquiry into achieving economic security for women in retirement made this recommendation in 2016, which was "noted" by the government.

While women are more likely to take time off to have children and look after them, submissions noted they are also more likely to take on other unpaid carers' duties, multiple part-time jobs and work in lower-paid industries. All of these factors affect the final super balance.

Industry Super Australia chief executive Bernie Dean said that "until we fix inequities in the system, we will continue to see women retiring with balances that are persistently lower than men".

Other recommendations made across some of the submissions include the consideration of joint accounts for couples, getting rid of the $450 minimum super contribution threshold and fast-tracking women onto a higher super guarantee.

Women in Super chief executive Sandra Buckley said there had been structural inequities in the super system that failed to consider women's working patterns and lower incomes.

"A growing number of women older than 55 face the dilemma of a poverty-stricken retirement, as a result of caring for others," Ms Buckley said.

"We have a unique opportunity now to act to change the structural inequities or we will be condemning future generations of women to the same appalling outcome."

The Grattan Institute's submission said there was a "principled case to be made" for the payment of compulsory super contributions on government-funded paid parental leave but warned it was unlikely to make a noticeable difference to the retirement funds of middle-income women. Instead, the think tank recommended the age pension and rent assistance were the best ways to prevent retirement poverty.

AMP's submission said it was "irrefutable" that women were worse off at retirement, though there were many reasons for this issue.

"For a nation that prides itself on fairness and equity, such outcomes are unacceptable," its submission said.

"Women take an average five years out of the workforce to care for children or a family member which can cause their super savings to stagnate and begin to fall behind those of men."

The Australian Nursing and Midwifery Federation also raised concerns that the effect of years of less or no income due to giving birth and raising children was "significant and ongoing" in super.

"Payment of superannuation when on paid and unpaid parental leave would be a significant reform to alleviate the cumulative effect of periods of unpaid leave in working life.

"This would assist a large number of women and would not discriminate against men, who should also be encouraged to take leave to rear children."