Women losing out big time on superannuation

The persistent inequity in the superannuation system is an urgent issue that needs to be addressed.

At a time in their lives when women should finally have the space and freedom to achieve long-held dreams, they are being confronted with a harsh reality.

Older women are becoming increasingly more likely to find themselves without a home to own, facing low incomes and retire with grossly inadequate superannuation savings.

The picture facing many older women is truly tough. Older single women are the fastest-growing cohort experiencing housing stress and homelessness. In the five years from 2011 to 2016 the number of women experiencing homelessness jumped 31 per cent.

More than 30 per cent of single women over the age of 60 also live in income poverty.

Women who retired in 2016 had an average super balance of $157,000 while men had $271,000, figures from the Association of Superannuation Funds of Australia show. Neither gender is retiring with enough super but the $120,000 gap between men and women demonstrates the system is broken.

As Australia faces an ageing population, addressing the persistent inequity in the superannuation system is an urgent issue. Governments, superannuation funds and employers must work together to solve this real and pressing problem. Australia’s superannuation structure assumes that a worker will have full-time, secure work and an uninterrupted career for at least four decades. It also assumes mortgage-free home ownership in people’s latter years.

An intricate web of issues bite into women’s superannuation savings, often including time-out to have babies and raise children.

This can often (and mistakenly) just be attributed to “choice” — women “choosing” to start families, or “choosing” to work in lower paid roles. But this overlooks the role centuries-old gender-based discrimination is having on undervaluing what’s seen as “women’s work” and prevailing workplace and family attitudes about who should be responsible for caring.

Australian women spend almost twice as many hours each day performing unpaid care work than men and Australia has the third-highest rate of part-time employment in the OECD — 38 per cent of Australian women work part-time compared with 15 per cent of men.

For those who work full-time, Australian women earn an average of 15.3 per cent, or $251.20, less than men each week. This means women would need to work an additional 62 days each year (on top of their full-time load) to take home as much money as men.

A persistent lower proportion of women in managerial and c-suite roles also has a direct effect. Many women are overlooked, miss out on promotions due to career gaps or discrimination, or actively forgo career advancement as they struggle to juggle family and work.

With parenting often stretching over many years, the cumulative effect gouges a lasting wound in women’s final super balances. It also constrains women’s ability to build wealth through other assets.

Obviously, this has terrifying ramifications for many women, particularly those whose relationships have broken down and are facing homelessness or poverty, or those who cannot leave abusive relationships lest they find themselves in the same situation.

There are many potential solutions, including some costed by organisations such as The McKell Institute.

Some are low-hanging fruit and, with a federal election on the horizon, have already been folded into at least one major party’s policy. For example, scrapping the $450 a month earning threshold that exists before an employer is required to pay a worker’s superannuation. Women are disproportionately represented in this cohort of workers as they often work two or three part-time or short-term roles to juggle caring responsibilities, particularly when their children are very young.

The federal government could also choose to pay superannuation on parental payments. And, as recommended by the 2017 Not So Super for Women report, superannuation funds could introduce a fee-free period up to 12 months for parents on parental leave, most of whom are women.

Other initiatives could include more targeted tax breaks, allowing joint superannuation accounts for couples to reduce fees and help compound savings, and cracking down on all employers paying the correct superannuation entitlements.

Committing time and funds to fixing our superannuation system would be an investment in Australia’s future. It’s an investment that is urgent. It needs to be made today.

Andrew Cairns is chief executive of Community Sector Banking.