Closing the gender super gap
Gender pay and super parity continue to be a key challenge for women. Particularly, when retirement outcomes for women could be improved by:
- the government removing structural inequalities from the economy and superannuation system, as proposed in the ASFA Pre-Budget Submission for the 2022-23 Budget,
- employers amending pay and leave policies to better support the choices and challenges faced by women,
- encouraging spouse contributions, where applicable, to assist spouses in contributing to their partner’s super, and
- individual women taking control of their super and harnessing tax benefits, long-term investment opportunities and government incentives to grow their super savings.
Women’s current economic position
In Australia, women earn on average $262 per week (or 14%) less than men based on Average Weekly Earnings¹.
Among a range of other factors listed below, the gender pay gap means that in 2019 women retired with a mean superannuation balance of $289,227 compared to $476,744 for men². Median balances were lower at $137,050 for women and $178,800 for men, a difference of around 24%³.
Fighting the doom and gloom
While the $187,517 gender gap in mean superannuation balances at retirement measured in 2019 is concerning, it’s also shrinking – in 2015 this gap was $222,232². Median balances showed the same pattern across the period.
The goal now is to build upon this momentum by further driving and supporting the legislative, social and economic changes and employment opportunities required to address the imbalance. It was improvements across these areas that originally empowered women to increase their proportional participation in the paid workforce in Australia from around a third in 1966 to almost half in 2020³. It will be further improvements that will allow us to continue to close the gender super gap.
Everyone can play a part in making sure there is a fairer retirement outcome for all Australians.
Why is there a gap in retirement savings?
There are a range of reasons why women reach retirement with less in super than men including:
- The gender pay gap, discussed above, which means women earn on average $262 per week less than men¹.
- Women do almost double the hours of unpaid work per week compared to men². This means women have less time to dedicate to paid work which can leave them financially vulnerable in cases of divorce or if their partner dies.
- Women are almost three times more likely than men to be working part-time⁴, and those who earn less than $450 a month don’t currently receive superannuation guarantee (SG) payments.
- Women live 4 years longer than men on average⁵, which means women are more likely to live in poverty in old age as their smaller super balances must last longer⁶.
- Women are more likely to retire sooner, with an average retirement age of 52 years, compared to age 59 for men, which may significantly reduce savings capacity approaching retirement, while further exacerbating the need for smaller retirement balances to last longer.
What is the government doing to help?
One action the government has taken to improve retirement outcomes for women is removing the $450-a-month threshold for SG payments.
From 1 July 2022, employers will be required to make SG payments for all eligible employees even if they earn less than $450 per month, which the Government states “…will remove an outdated feature of the superannuation system and in doing so will improve equity in the system.”⁷
What can women’s partners do to help?
A great way women’s partners can help to minimise the impact taking time out of the workforce to raise children can have on their partner’s retirement savings is to contribute to their super.
To encourage this, the government provides a tax offset of up to a maximum $540 a year (18% of a total contribution of up to $3,000) for spouse contributions if the recipient spouse earns less than $37,000 a year.
Learn more about spouse contributions.
What can women do to improve their retirement outcomes?
Although the gender pay and super gaps may seem daunting, ultimately women can improve their retirement outcomes by sorting out their super and taking advantage of the tax benefits the government offers to incentivise Australians to save for retirement.
Steps women can take to sort out their super include:
- Finding and combining multiple super accounts
- Boosting their super balance through contributions, which may also provide access to a Government Co-contribution of up to $500 p.a.
- Protecting their earning potential with the right insurance
- Making an active investment choice that suits their financial goals
- Meeting with a financial adviser to put a plan in place for their finances
Depending on their level of income, some tax benefits women may be able to access to boost their super include:
- Concessional contributions tax of 15%
- Government co-contributions for low-income earners
- Low Income Superannuation Tax Offset
If you’d like more information about taking control of super and maximising retirement savings, the Australian Taxation Office website.
¹ Australian Government, Workplace Gender Equality Agency (WGEA), ‘Australia’s Gender Pay Gap Statistics’ 27 August 2021. wgea.gov.au
² Melbourne Institute: Applied Economic & Social Research, The Household, Income and Labour Dynamics in Australia Survey: Selected Findings from Waves 1 to 19 (HILDA), 2021
³ Australian Bureau of Statistics, ‘Changing female employment over time’, released 18 March 2021, abs.gov.au
⁴ Australian Bureau of Statistics, ‘Gender Indicators, Australia’, released 15 December 2020, abs.gov.au
⁵ Australian Bureau of Statistics, ‘Life tables’, reference period 2018-2020 released 4 November 2021, abs.gov.au
⁶ Australian Council of Social Service and University of New South Wales, Poverty in Australia 2020. Part 1: Overview. 2020, povertyandinequality.acoss.org.au
⁷ Senator The Hon Jane Hume, The Hon Josh Frydenberg MP Treasurer, Joint media release: ‘Parliament passes legislation to enhance the superannuation system’, 10 February 2022, ministers.treasury.gov.au