Superannuation shortfall hits women hard in retirement

Governments must act to reduce the number of women in poverty, says Naomi Edwards

THIS year’s theme for International Women’s Day on Sunday is #EachforEqual. It’s a global day to celebrate the economic, cultural and political achievements of women, while also marking a call to action for creating a gender-equal world.

Tasplan is supporting this call to action to create gender equality by highlighting the need to increase efforts to address the gender superannuation gap.

We’re also encouraging women to take control of their super by following our simple seven-step super action plan (www.women.tasplan.com.au) to make sure their super is working for them and not against them.

You hear a lot about the gender pay gap, and rightly so, but if we’re to truly have gender equality, it’s time to address the gender gap in superannuation.

According to Workplace Gender Equality Agency, women working full-time earn less than men, 13.9 per cent less in fact.

Women in Super is a national not-for-profit advocacy organisation that works to improve women’s retirement outcomes.

The statistics related to women and their retirement show that although women on average live five years longer than men, they retire, on average, with 47 per cent less super.

Reasons include not just the overall lower pay, which means lower superannuation contributions, but also that 43 per cent of women work parttime; women take on average five years out of the workforce to care for children or family members, which can cause their super savings to stagnate and fall behind men; and an estimated 220,000 women miss out on $125 million of super contributions because they don’t meet the requirement to earn $450 each month (before tax) from one employer (many women work more than one part-time job).

The gap in retirement savings is the culmination of a lifetime of lower wages and the need for many women to leave the paid workforce to have children and care for others.

Super is dependent on wages and with lower and less frequent contributions, women miss out on the full benefits of compounding returns over their lifetime.

A single person needs $545,000 to retire comfortably, which is under $100,000 less than the $640,000 needed for a couple, leaving single women at a much greater risk of poverty, housing stress and homelessness in retirement.

Australian Human Rights Commission statistics show the fastest growing cohort of homeless people in Australia is women aged 55 and over, with about 40 per cent of older single retired women living in poverty and experiencing economic insecurity. These

older single women are more dependent on the age pension than men.

In addition, 8.5 per cent of women between 65 and 74 still have a mortgage, and 44 per cent of women rely on their partner’s income as the main source of funds for retirement.

These are shocking statistics we all have an obligation to address. This trend is set to continue without change at a federal level. Women in Super has proposed a five-step plan to help close the gender super gap and improve retirement outcomes for women. This includes:

GIVING

low-income earners an annual contribution of $1000 from age 25 for those with super balances under $100,000

REMOVING DELAYS

to increasing employer super contributions

REMOVING THE RULE

that those earning less than $450 each month don’t receive super

PAYING SUPER

on parental

leave and

MEASURING

and publishing the super gap each year to inform legislative decisions.

These are all suggestions worthy of consideration at the highest levels of government to address the superannuation gender gap on a large scale. Businesses can also take a progressive stance to make super fair for women.

In the meantime, take control of your own super to ensure it is fully maximised by following a simple super to do list. Tasplan’s super tips for women are: check your super balance; review your account details; combine multiple super accounts; explore making additional (voluntary) contributions; and review your investment options.

This International Women’s Day let’s all make an effort to raise the profile and address the shocking reality of the gender gap in superannuation, and if you do have a super balance that hasn’t received a lot of your attention recently, now is the time to take control and make sure it’s working for your and not against you.