AustralianSuper, KPMG: Superannuation failing women

The compulsory superannuation system discriminates against women, AustralianSuper and consulting firm KPMG say.

The superannuation system is failing women retirees in particular, according to AustralianSuper and KPMG. Picture: Dmitry Berkut

The compulsory superannuation system discriminates against women, the $190bn Australian­Super and consulting firm KPMG have argued in their submissions to the federal government’s retirement income review.

Both submissions point out how women’s lower pay levels, plus their time out of the workforce for parenting and caring ­duties, have delivered a compulsory super system that provides consistently lower retirement savings outcomes for women.

In its submission, KPMG points out the median superannuation balance in Australia for ­people approaching retirement age — between 55 and 64 — was $183,000 for men and only $119,000 for women.

“The retirement income system was not designed to discriminate against women,” KPMG said in its submission. “(But) it is a combination of factors that reduce women’s participation in the workforce and other elements of Australia’s system that discourage, or do not enable or incentivise, women to fully participate in the workforce that lead to reduced retirement savings for women.”

AustralianSuper, the country’s largest super fund, says the current system was “one of the most sustainable superannuation systems in the world”. But it adds that “adequacy and equity have yet to be fully achieved in the retirement income system”.

It says factors such as the persistent gender pay gap, the $450-a-month income threshold for compulsory superannuation to kick in, and the rise of the “gig” economy all led to outcomes that were worse for some workers.

“The issues of the gender pay gap, career breaks and longevity in retirement all serve to adversely affect women’s retirement outcomes,” AustralianSuper says.

“These issues have not been adequately addressed in the retirement income system so far and require wider, long-term consideration.”

AustralianSuper says the system did not deal with the issue of carer duties and how they affected the amount of superannuation a person had for their retirement.

It said the system, which was based on accumulation funds rather than defined benefits entitlements, “means carers in our retirement income system are effectively discriminated against”.

“Our retirement income system recognises and rewards time spent in paid employment and does not make provision for those who have spent time out of the workforce,” it says.

It argues the 9.5 per cent compulsory super guarantee contributions should go up to 12 per cent as currently envisaged under federal government policy to ensure workers have sufficient superannuation savings to “have dignity and comfort in retirement”.

It also argues that the government should remove the $450-a-month minimum income threshold for compulsory super so that people in low incomes and those in the “gig” economy can also be paid superannuation.

The KPMG submission contains a list of recommendations that include scrapping the $450-a-month minimum income threshold, providing super contributions for paid parental leave, providing the ability for people who are primary carers to “top up” their super contributions, amending the Sex Discrimination Act to ensure that employers who pay additional superannuation contributions for people who are primary carers are not in breach of the Act, and replacing the annual concessional cap system for workers who are primary carers with lifetime concessional caps.

AustralianSuper also argues that few Australians understand the role of superannuation as a ­retirement income, with most of them taking a lump sum withdrawal on their retirement.

It expressed concern about the falling levels of home ownership, saying a growing number of ­people were retiring with mortgages on their homes, adding the situation was worse for women who were retiring more often than men without owning their home.