Finance Your Super Why the figures on women’s superannuation are not always what they seem

Why the figures on women’s superannuation are not always what they seem

Women's super
The figures on women's superannuation mightn't be as good as they look. Photo: Getty
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A number of measures appear to show the super balance gender gap is closing, but a closer look at the raw figures will show the opposite.

Between June 2015 and June 2019 the total pooled superannuation balances of men rose 38.6 per cent to $862.03 billion, while those of women rose 36.8 per cent to $587.2 billion.

That means men’s balances were rising faster than those of women.

But if you break down those bulk superannuation figures into the growth of average balances, you find something different.

In the three years to June 2017, the men’s average balance rose 11.4 per cent to $146,420 as women’s balances lifted 15.4 per cent to $114,350, according to the Australian Prudential Regulation Authority. [APRA]

Using the average figures, women – while still well behind men in terms of overall balance size – are increasing their balances faster than men. So what’s going on?

Both things are true

To make sense of the figures, you need to understand what makes them up.

The average balance is all the money in APRA-regulated funds held by women or men divided by the number of super accounts for each gender.

Total balances just throw together and measure what’s in the super bag.

The majority of members have their money in default funds chosen by their employer because they are not interested in making a choice themselves.

Default funds total about 60 per cent of accounts, but only 38 per cent of money is in the pooled super system because they are overwhelmingly held by those on industrial awards rather than management or employer types with big incomes.

Men are more aggressive with investments, says David Knox.

Keep that difference in mind to understand why overall men’s balances are growing faster.

“Men are inclined to take more risks than women,” said David Knox, partner with super consultants Mercer.

“So in the ‘choice’ sector [where people choose their own funds] men adopt a more aggressive position than than women and the result is they make higher returns from the stockmarket.”

What that means is that men with choice funds are outgrowing women, and presumably all people in default funds.

Because these men in choice funds have much bigger balances than the average default member, their higher returns have a bigger influence on the overall balance bucket than their numbers would suggest.

“That is particularly the case when markets have been strong in recent years,” Mr Knox said.

But if you look through the influence of the choice sector to look what is happening more generally, you see that the position of women has improved dramatically since the mid-2000s.

In June 2017 the average balance of women between 60 and 64 was 82.5 per cent of men’s.

Back in June 2006 women’s balances were 35.7 per cent of men’s.

If you use the median, which reduces the influence of unusually big balances of a few, you see the position of women has improved even more.

Back in June 2004, the average balance for men between 55 and 64 was 115.32 per cent higher than for women. By June 2019 this differential had moved back to 54.3 per cent.

The reasons for the improvement in women’s super positions “is more to do with social change than actions of the superannuation industry,” Mr Knox said. “The gap is narrowing gradually.

“Women are getting back into the workforce earlier and staying longer after having children.”

But Women in Super CEO Sandra Buckley said there were still significant problems for many women in building super.

“The structural inequities in the superannuation system that make it harder for women to accumulate super have not been removed or improved,” Ms Buckley said.

Sandra Buckley says impediments remain for women.

“Namely, the $450 monthly threshold before super is payable still exists, super is not paid on Paid Parental Leave, and super is based on income earned so unpaid work (caring responsibilities) does not attract super or ‘caring credits’ as they are referred to in other countries.

“One-third of women are retiring with no superannuation and single women aged 55 and over are the fastest-growing cohort of homeless.

“These facts do not indicate that there will be any improvement in the gender super gap for many years.   

“The $450 monthly superannuation threshold particularly hits the large percentage of women in low-paid part-time, casual or contract roles that pay little or no super.”

The New Daily is owned by Industry Super Holdings

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