Superannuation divide: women still stuck behind in the wealth game

Superannuation balances continue to show an unfair advantage for men, but there are moves that can help narrow the gap.

Women are rising to the top of corporate Australia in greater numbers than ever before, but their financial success is not flowing down to average superannuation savers.

Woolies announced last week its first female CEO, while Coles, Qantas and several other big companies already have theirs.

However, the average super balance of an Aussie male aged 60-64 is $403,000 while for a woman it’s $318,000 – a 27 per cent shortfall. For median balances in this age group the difference is 33 per cent – $212,000 for men versus $159,000 for women.

There are several reasons why this gap persists, but also some ideas to shrink it in the coming years.

The first cause of the super discrepancy is that men still earn more than women. Their gap in overall pay is often caused by different work patterns – such as more women working part-time – and career interruptions from raising children.

But it’s not just women working fewer hours that causes the discrepancy – wages figures released last week by the Australian Bureau of Statistics show full-time average weekly ordinary time earnings for men are $1981.30 and for women it’s $1741.90.

That gap is the smallest on record but is still way too wide. It may reflect factors such as blokes being more aggressive in asking for extra cash, the majority of men avoiding long career breaks for family commitments, and long-running prejudices.

Women still retire with much less superannuation than men. Picture: iStock

It’s hard to say whether the gender pay gap will narrow quickly in the future, and it will depend largely on couples’ choices about who works what hours, who stays home more with the kids, employers changing their mindsets, and whether more women work in higher-paying sectors.

Another key cause of the big difference in superannuation balances is time. While our workforce is changing as more women move into senior management, it’s not too long ago that there were very few female CEOs.

And given that super balances generally build over 30, 40 or 50 years, today’s numbers partly reflect the workforce composition of decades ago. Super only became compulsory in the early 1990s – back when fewer women were in higher-paying management roles.

A recent report by Household Capital says Australia’s superannuation settings favour men, with only 40 per cent of the value of the nation’s super tax concessions going to women. There also remains an annual super contribution gap of 17.7 per cent between men and women, it says, meaning mens’ balances will continue to climb faster.

While we know the key reasons why women’s super is stubbornly lower, what can Australia do about it?

Several ideas have been shared, and some – such as the recent removal of a minimum monthly income threshold of $450 before employers must pay compulsory super – already have become law.

This month the Super Members Council urged the government to make changes in its upcoming federal budget to increase retirement savings for women.

These included paying super on the Commonwealth Parental Leave Pay scheme, and increasing the low-income superannuation tax offset so workers earning up to $45,000 received a full tax refund on their compulsory super guarantee contributions.

The Association of Superannuation Funds of Australia has advocated for both those initiatives too, and also for a superannuation baby bonus.

We need good ideas to keep coming, so women will eventually achieve equality when it comes to retirement nest eggs.

Originally published as Superannuation divide: women still stuck behind in the wealth game