Superannuation industry experts are calling on the federal government and super funds to act now to close the gap between men and women’s retirement savings.
The average Australian woman currently retires with a super balance of around $112,600, despite needing around $40,000 a year in retirement income, according to research from the Association of Superannuation Funds.
Mercer Consulting senior partner Dr David Knox said at the Women’s Super Summit in Melbourne yesterday Australian women are living longer and action needs to be taken now to ensure the super system provides for them in retirement.
“Our statistics suggest that 50% of Australian women will live beyond 90, and half the baby girls born today will live beyond 95,” he says.
The main causes of the gap in super balances were identified as the gender pay gap and the level of workforce experience.
Many women choose to take career breaks to have a family or care for elderly parents and this impacts upon their ability to accrue super and earn a higher wage.
“If you’re out of the workforce you still need funds put away for your retirement,” Knox says.
“We need some pooling (sharing) of the longevity risk between men and women… This will lead to better outcomes as we will not all self-insure.”
Research from The Australia Institute revealed almost 70% of retired women over the age of 45 relied on the government pension as their main source of current personal income and only 10% were reliant on their superannuation.
Many speakers called for super funds and employers to better educate women about their super options, including encouraging them to make voluntary contributions in their early working years.
However, The Australia Institute executive director Richard Denniss told the crowd education was not the answer.
“More education of women or the community will not close the gap between the retirement incomes of women and men,” he says.
“Of course, we should do everything we can to give them more information… but let’s be very, very clear for all of the reasons we’ve talked about today there is one obvious conclusion – if men earn more than women and women take more time out of their working lives than men, men will have a lot more money in retirement.”
Denniss says the structure of the superannuation system’s tax concessions are unfairly skewed towards the top 10% of earners.
Research from The Australia Institute revealed the bottom 60% of income earners receive just 27.2% of the superannuation tax concessions, while the top 10% receive 31.8%.
Denniss argued the pay gap between men and women is a fundamental problem which needs to be addressed before there will be any difference in women’s retirement savings.
“A 55-year-old-woman today still in the work force with 40 years ahead of her is going to get very little, probably nothing, from more information about superannuation. It’s too late for her to choose a high paid job, it’s too late for her to choose to have not had children or to care for her own parents, it’s too late for her to accumulate a large balance,” he says.
Sex discrimination commissioner with the Australian Human Rights Commission, Elizabeth Broderick, called on more research to be done into caring credit schemes.
“That is for those women who need to leave work, to care – there would continue to be a notional payment into a superannuation account for them,” she says.
Many of the speakers, including University of Sydney professor Marian Baird, criticised the dumping of the low income superannuation contribution, saying it will hurt women the most.
Baird also said legislation should change to see women who earn less than $450 per month in a job still paid super.
“It’s feeding into an issue of underpayment of superannuation for women who are doing smaller jobs with fragmented working lives,” she says.
She said many women work multiple jobs and earn more than $450 in total, but are not being paid super, and she encouraged employers to voluntarily pay these employees super.
Chief executive of the Association of Super Funds of Australian Pauline Vamos said 81% of women are not actively engaged with their super, often due to time constraints, and encouraged employers and partners to give women 60 minutes to “sort out their super”.
Executive communications manager from the Australian Institute of Superannuation Trustees, Janet de Silva, and Women in Super policy manager Alissa Harnath proposed giving employees the option to contribute a percentage of their pay rises straight into their superannuation.