Women retire with just over half the super of men*, leaving many women facing an uncertain future in retirement.
Addressing the issue, a Senate inquiry into women's economic security in retirement examined why women retire with significantly less super than men and are more vulnerable to poverty, particularly later in life.
Australian Human Rights Commission research shows that single, elderly females experience the highest incidence of poverty and are at the greatest risk of entrenched poverty**.
The Inquiry handed down a range of recommendations, including a number of measures aimed at making Australia’s superannuation system fairer for women.
HESTA, the industry super fund representing more than 820,000 members working around Australia in health and community services, was among a number of organisations to provide a submission to the Inquiry.
Reasons for the gap
HESTA’s submission identified the main causes of this difference in super balances were that women often earned less than their male counterparts and had periods of unpaid time out of the workforce.
In health and community services there was a 26.8% gender gap in average weekly full-time equivalent earnings.
Compounding this gender pay gap is Australia’s superannuation system, which is designed to reward the working patterns of men who are more likely to have long and uninterrupted careers.
Women are more likely to assume unpaid caring roles for children and family members. This unpaid time out of the workforce generally occurs at the early stages of a women’s career, during prime working age 25 – 45 years^. The result is that many women having periods of no super contributions or reduced super contributions, which also significantly impacts their balance at retirement.
Findings from the Inquiry were handed down in April and included recommendations that, if implemented, could help close the gender super savings gap and improve the retirement outcomes for many women.
The inquiry agreed with HESTA and others that called for the retention of the Low Income Super Contribution (LISC) and removal of the $450 monthly super threshold.
Low Income Superannuation Tax Offset
The Government announced prior to the 2016 election that it would retain the LISC, now renamed the Low Income Superannuation Tax Offset (LISTO). The LISTO is an important equity measure as it ensures those earning up to $37,000 pay no tax on superannuation guarantee (SG) payments their employer makes. Without the LISTO, they would pay the same, or in some cases, a higher tax rate on their super contributions than they pay on their wages. Every other Australian earning more than $37,000 benefits from super’s tax concessions.
$450 monthly super threshold
HESTA has long advocated for super to be paid to those earning less than $450 per month from their employer. Women, particularly those working in health and community services, can often work in more than one part-time role. Their salary from each employer can fall under the $450 per month super threshold, resulting in these women being totally excluded from super.
Closing the gap
These recommendations help ensure all Australian women can afford a dignified retirement. However, you can take steps now to close that gap. It’s never too early or too late to make a difference to your super. Find out more about how you can take charge of your super here.
This article was supplied by HESTA, the Diamond Sponsor of APHA.
* Australian Bureau of Statistics (ABS): Retirement and Retirement Intentions, Australia, July 2012 to June 2013. abs.gov.au/austats/abs@.nfs/mf/6238.0
**Australian Human Rights Commission 2009, Accumulating poverty? Women’s experiences of inequality over the lifecycle
(3) Australian Bureau of Statistics Labour data 2011 as cited in Australian Human Rights Commission Investing in care: Recognising and valuing those who care. 2013
Issued by H.E.S.T. Australia Ltd ABN 66 006 818 695 AFSL 235249, the Trustee of Health Employees Superannuation Trust Australia (HESTA) ABN 64 971 749 321. This information is of a general nature. It does not take into account your objectives, financial situation or specific needs so you should look at your own financial position and requirements before making a decision. You may wish to consult an adviser when doing this. Before making a decision about HESTA products you should read the relevant Product Disclosure Statement (call 1800 813 327 or visit hesta.com.au for a copy), and consider any relevant risks (hesta.com.au/understandingrisk).