Wide gap leaves women less ready for retirement
WOMEN are more than twice as likely to spend retirement in poverty than men and the forthcoming Federal Budget must address this, a superannuation industry expert claims.
Nerida Cole, head of advice at self- managed superannuation fund Dixon Advisory, referred to a 2016 report by the Senate Standing Committee on Economics, saying an almost 50 per cent gap between the superannuation balance of men and women at retirement needs urgent attention.
“Women face challenges at retirement due to lack of affordable housing and work patterns, which have not supported building a strong super balance,” Ms Cole said.
“We hope to see proposals in this year’s budget address these areas.”
A December 2015 report from the Association of Superannuation Funds of Australia ( ASFA) showed the average superannuation balance for males was around $ 135,000 and $ 83,000 for females. Average balances around retirement age ( 60 to 64) were $ 292,500 for men and $ 138,150 for women.
ASFA chief executive Dr Martin Fahy said more than 80 per cent of women were retiring with insufficient savings and the issue needed a whole- of- government and social response.
“Security for women in retirement is an important issue,” Dr Fahy said. “Despite increasing workforce participation by women, there still remains a significant disparity between the retirement incomes of men and women.”
Five contributing factors Dr Fahy pointed out included: significant periods of parttime or no employment while women cared for children and other family members; an overall gender pay gap; the increasing casualisation of the workforce; a longer life expectancy for women seeing funds stretched further; and the adequacy of superannuation overall.
Dr Fahy called for the superannuation guarantee rate to be raised to 12 per cent as soon as possible.
Options that Ms Cole said would improve women’s finances in retirement included flexible policy settings that allowed women’s super balances to keep growing while they stopped employment to become parents or caregivers; looking at ways super could assist people paying down a mortgage; improving access to affordable housing; and simplifying the language around available concessions such as co- contribution and spouse- splitting contribution, so that the concepts could be easily understood.
“It is unacceptable that women are 2.5 times more likely to spend retirement in poverty. We’re talking about a problem that affects 45.9 per cent of the Australian workforce,” she said.
“There is no quick fix but it’s a challenge that needs attention in this year’s budget to prevent the problem getting even bigger.” ASFA recommendations:
Lift the rate of Superannuation Guarantee to 12 per cent.
Remove the $ 450- a- month threshold for the superannuation guarantee.
The Superannuation Guarantee should apply to all income replacement payments, eg parental leave.
Allow employers to contribute more to super for women without being considered to have breached anti- discrimination legislation.
Make super compulsory for the self- employed.
Ensure employers’ compliance with the super guarantee rules is improved