Super gap still a hurdle for women

Superannuation gender gap

Ian MacKenzie

Superannuation gender gap

Josie Scott, Staff reporter

Women are earning half the amount of superannuation men do according to the latest Roy Morgan Research findings.

In 2015, women with superannuation had an average balance of $101,900 compared to men’s average balance of $158,100.

The median balance of women’s superannuation, $35,200, is almost half that of men’s, $62,900.

Although the gap between men’s and women’s super savings is closing, from 44 per cent ten years ago to its current 56 per cent, there is growing concern that women are not saving enough money for their retirement.

Norman Morris, Industry Communications Director at Roy Morgan Research said in a media release, that the gradual narrowing of the super gap since 2005 was promising, but there were still major issues that need to be addressed.

” Several factors are helping to close the gap, such as the gradual impact of the compulsory super scheme, higher levels of education for women, increased awareness of the issue, increased work-force participation and a trend towards self-managed super,” he said.

“However, the gap is narrowing very slowly, and more definitive action is probably needed.”

The research also showed women with self-managed funds have the highest satisfaction rating at 79 per cent.

The average level of satisfaction women had with their managed super funds was much lower at 57 per cent.

Many of the major super management providers are falling short of the average, with AMP being the lowest at 49.5 per cent satisfaction.

“Our results show that a number of major funds are not meeting the expectations of their female members, which will make retaining and attracting funds more difficult,” Mr Morris said.

In an article written for The Sydney Morning Herald, Labor Senator for NSW Jenny McAllister said the gap is partly due to women mostly holding the responsibility for raising a family.

” Women are financially penalised not only for their caring obligations, but also for being female,” she said.

Professor of Finance at the University of Sydney, Susan Thorp told ECU Daily the gap between men and women in superannuation is related to the fact that women, on average, earn less than men and spend more time out of the workforce and working part-time.

“Because savings into superannuation accounts are a percentage of earnings, how much you earn is the main thing that determines how much you save.

“We do find that some women try to make up for their smaller savings by making extra voluntary contributions (savings), usually when they are middle-aged and can afford it,” she said.

Ms Thorp also said there is a limit to how much extra people can contribute to their superannuation, which makes it harder for women to catch up to the amount of super that men earn.

The Senate is holding an inquiry into the gap and will consider if reforms need to be made into superannuation related laws, social security payments and paid parental leave.

The inquiry will also consider whether the current main sources of retirement income for women are adequate.

A spokesperson for Women In Super told ECUDaily, the government should be looking at introducing caps based on the amount in super accounts, rather then annual contribution caps to help reduce the super gap between men and women.

They also claim the super tax system should be changed to make it more equitable for women.

“Women (and increasingly men) do not follow a full-time working path for 40 years,” they said.

“The tax system is skewed to benefit those working full-time in well-paid jobs as the tax concessions applied to superannuation contributions are extremely beneficial if you are in the top tax brackets.”

Women In Super said women should look at the following measures to help decrease the gap between men and women’s super:

  • Start a super account as soon as they get their first job to get maximum benefit of accumulation
  • Contribute as much as they can into their super account in their early years of earning
  • Recognise that the majority of women marry, have children and therefore move to part-time work by mid-30s which means that their capacity to save for super is stymied very early on – they should make the most of the additional voluntary contributions while they can (the average career break is 5-7 years)
  • Once children are older, ramp up their super savings again
  • Ensure they consolidate any super accounts they have

They also suggest that more information needs to be available for self-employed women in regards to the options they have with superannuation.

“Many women are setting up their own businesses… The self-employed are not obliged to have superannuation paid as part of their wages…We would like to see all self-employed women receive information about the benefits of having super and hopefully encouraging them to think about their retirement before it is too late.”