The “disturbing” gender gap in retirement savings must urgently be closed, Australia’s super funds have declared.
Women retire with approximately half as much superannuation men, and one in three have no super at all, a report from the Association of Superannuation Funds of Australia (ASFA) has found, leaving them “drastically short” of a comfortable retirement.
ASFA chief executive Pauline Vamos made these comments in a comprehensive report released on Thursday, which called for immediate reforms, including changes to the law.
“Policymakers need to urgently address the issues women have when it comes to their super, otherwise, we will have a growing number of women living in poverty when they retire,” Ms Vamos said.
A study on poverty released by Australian Council of Social Services in October revealed women were at a much higher risk of poverty – 14.7 per cent compared to 13 per cent for men.
Employers must be allowed to contribute more to the super funds of their female workers to close the gender gap, Ms Vamos said, something that would currently breach anti-discrimination legislation.
The average female super fund currently has $44,866 compared to $82,615 for men, not-for-profit group Women in Super estimated. The average woman retires on $105,600, which is $91,400 less than the average man has when he stops working.
Women in Super national chair Cate Wood told The New Daily that many women retiring in the next decade will “face poverty”, having received no super for much of their careers and “low levels” since Paul Keating introduced the super system. Her organisation supports an exemption under the Sex Discrimination Act to allow employers to pay an extra two per cent super to their female employees.
Female employees save less because they are more likely to work in lower-paid jobs, work casually or part-time, and take time out of the workforce to look after children or family members. The gender pay gap, currently at 18.2 per cent, is also a key factor. Women tend to live almost five years longer than men, meaning their superannuation must last even longer.
A study released on November 3 by REST Industry Super found that women are also less likely than men to be currently receiving compulsory employer super contributions, with 59 per cent receiving employer contributions versus 75 per cent of men in the same age range.
In the absence of any drastic change to the industry, here is how women can rescue their retirement for themselves.
Top up before taking a break
Australian Institute of Superannuation Trustees (AIST) chief executive Tom Garcia told The New Daily that extra contributions, especially before maternity leave or some other type of career break, can help women earn back some of the potentially lost compound interest.
“Even adding small amounts can prepare you for a drop in income,” Mr Garcia said.
Keep the LISC
The government has chosen to axe the low-income superannuation contribution relied on by millions of Australian women to top up their super.
This payment of up to $500 a year automatically boosts the super savings of low-income workers, two million of whom are female, AIST estimates. The payments will cease in 2017, which AIST says is “very disappointing”.
“Removing it will affect one in two working women – a backward step to narrowing the retirement savings gender gap,” Mr Garcia said.
If your annual income is $37,000 or less, you may automatically receive the LISC top up into your fund – at least for the next three years.
Follow the paper trail
It is even more important for women to keep an extra close eye on the statements sent from their fund to make sure they are being paid the right amount, Mr Garcia said.
Get a boost from your partner or spouse
REST Industry Super recommends partners or spouses to put extra into the woman’s super fund, especially if she is taking a career break.
The New Daily has reportedly previously that extra contributions up to $3000 to a non-working or low-income spouse’s superannuation can attract an 18 per cent tax offset, although couples should seek financial advice before making this decision.
Consider switching to a higher-performing fund
The average return on superannuation was 12 per cent in the last financial year. Industry experts recommend comparing short-term returns to five-, seven- and 10-year performance to determine if your current fund is right for you.