Women are not financially illiterate. They need more than condescending advice
Debate about recent and upcoming changes to superannuation, including the early release scheme and the proposed rise to the superannuation guarantee, has been running hot for a few months now. Likewise, the fact that women have been disproportionately hit by the pandemic has also been the subject of much commentary.
But an issue related to both those current debates that hasn’t gotten anywhere near as much attention as it should is women’s economic security. Or more specifically, their lack thereof.
Women retire with, on average, half the super of men. And they are the fastest growing portion of the homeless population over the age of 55.
With the pandemic hitting women – particularly their earning and saving potential – particularly hard, Australia’s sex discrimination commissioner Kate Jenkins recently warned that the current situation was “laying the groundwork for some pretty serious poverty for women”.
As a result, all eyes are now on the upcoming October budget, and the proposed follow-up to former minister for women Kelly O’Dwyer’s 2018 women’s economic security statement in order to help ameliorate some of the economic impacts of Covid-19 on women. According to a recent report in the Sydney Morning Herald, a group of female ministers including current minister for women Senator Marise Payne and assistant minister for superannuation, financial services and financial technology Senator Jane Hume, are diligently working on both.
Given expectations are so high, and so much is at stake, more than a few people, present company included, were, therefore, more than a little bit puzzled by Hume’s recent speech at the Women in Super Summit. OK, puzzled is a polite euphemism for mightily pissed off.
Essentially, Hume engaged in a giant “hey look over here” exercise, essentially blaming women’s lack of economic security on their supposed lack of “financial literacy”.
The problem is, the extent to which women’s financial illiteracy is “a” problem or “the” problem that needs fixing in relation to their economic security is highly debatable, according to a number of experts I spoke to on background. Some even went so far as to suggest that Hume did some pretty serious cherry-picking of the data in order to paint a picture of women as financially incompetent that is unfair ... even insulting.
When repeatedly asked about some of the criticisms of the speech and what some felt was an undue emphasis on a “gender gap” in financial literacy, a spokesperson for Hume told me: “‘Experts’ are entitled to their opinions, the Minister welcomes debate and discussion around matters that impact the best financial and retirement outcomes for Australians, of which financial literacy is an important tenet.”
In her speech Hume highlighted that in 2018 the Commonwealth Bank of Australia identified that only one third of women learned about longterm investing when they were younger. Yet the report that she referred to also clearly stated the following: “The evidence is clear. When it comes to their finances, women are as confident, capable and engaged as men”.
That report also found that 58% of women said that they were very much in control of their financial position, compared to 57% of men. Women were more likely to set financial goals, and they were more likely to demonstrate long-term thinking in their approach to financial management.
And while it has been shown that women do – in general – have lower financial knowledge when it comes to investing (and that was demonstrated by the Hilda survey Hume made mention of in her speech), a number of surveys have indicated that women have stronger-abilities with budgeting and day-to-day financial management.
For instance, the 2017 ASIC survey of Australian Financial Attitudes and Behaviours Tracker that Hume also mentioned in her speech shows that women are more likely to use budgets compared to men (81% compared to 74%), and they are more likely to save money by utilising separate savings accounts compared to men.
Finally, the Hilda survey was limited, as it only asked five questions, all related to specific investment concepts. Given women earn less and, therefore, have less to invest, it follows that there is a knowledge gap in that area. Some would argue that the Hilda questions are nota broad-based survey of financial literacy.
It once again appears to be women, not systems or structures, that need “fixing”. In the meantime, there are significant structural issues that a stack of reports and inquiries dating back more than a decade have found are the real drivers of women’s economic insecurity.
None of these reports – the Equality Rights Alliance “Retiring into Poverty” report, the Security4Women Alliance’s White Paper on women’s economic security, which was recently up-
dated to take into account the impacts of Covid-19, Senator Jenny McAllister’s report, “A Husband is Not a Retirement Plan” from the 2016 Senate inquiry – mention women’s financial illiteracy as a driver of women’s economic insecurity. They all, however, do say that the retirement gender gap is a consequence of caring responsibilities, lower rates of pay and gender discrimination in the workplace.
The last few months has seen a succession of warnings that the Covid crisis risks plunging a generation of women into poverty in their old age. Natasha Stott Despoja recently expressed concern about the pandemic’s impacts on women’s economic situation in her speech on gender equality as a key driver of domestic violence at the National Press Club.
We are at a critical crossroads when it comes to shoring up women’s economic security. Action is urgently needed on this issue politicians and policy makers have spent far too long – a decade or more – kicking down the road.
Ahead of the budget and the women’s economic security statement, women will be looking for a lot more than condescending advice to “mind their pennies”. Will they get it? I hope so.
We are at a critical crossroads when it comes to shoring up women’s economic security