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Closing the gender gap in superannuation

As we recognise International Women’s Day for 2021, it’s a good opportunity to celebrate the women in your life and reflect on areas where more strides need to be taken towards gender equality. When it comes to retirement, women’s super savings are still far smaller than men’s. Here are some tips to help change that.

International Women’s Day is celebrated on March 8th every year to recognise the social, economic, cultural and political achievements of women around the world. There’s no denying that Australian women have made leaps and bounds in recent decades. However, there is one persistent area where they still have some way to go: financial wellbeing and security.

In particular, women’s super balances continue to lag behind their male counterparts. The median super balance for Australians aged between 60 and 64 is $154,453 for men, but $122,848 for women.1 This can have a big impact on the type of retirement lifestyle that you, or the women you care about, are able to lead.

So what is driving the gender super gap, and how can it be overcome?

Why do women have less super?

Over the course of a woman’s working life, there are a number of factors that can add up to impact on her retirement savings. 

The gender pay gap

On average, women in full-time employment earn 14% below men doing the same work, taking home around $254 less each week.2 Because of the way the super system is structured, employers make compulsory Super Guarantee (SG) payments which are calculated as a percentage of a worker’s salary – currently 10% (effective from 1 July 2021). This means a lower salary will also result in lower employer contributions.

Career breaks 

While career breaks can happen for many reasons, including study or travel, women are far more likely than men to take time out of the workforce. This is because they are generally the ones who spend time caring for children or ageing relatives – in fact, they spend 64% of their ‘work time’ in an unpaid capacity, while the average for men is 36%.3 With super only being paid to people who are earning an income, and not included in paid parental level, these career breaks for women put them further on the back foot in terms of growing their retirement savings.

Lower workforce participation

After a period of time away to raise children, women can find it difficult to re-enter the workforce. Many transition back into employment in a part-time or casual role, either so they can juggle their family responsibilities or because they are unable to secure full-time work. 44% of employed women work part time, and this figure rises to 61% among mothers – compared with just 7.9% of fathers.

1ASFA, Better Retirement Outcomes: a snapshot of account balances in Australia, July 2019.
2Workplace Agenda Equality Agency, Australia’s gender pay gap statistics, 2020.
3Workplace Agenda Equality Agency, Unpaid care work and the labour market, 2016.

Women in part-time employment are working an average of 18 hours, bringing in less income and less super as a result.1

More risk averse

Women’s working patterns are only part of the picture – women and men have different levels of confidence around investing as well. A 2020 ASX report on investing trends showed that women are more risk averse with their investing choices, with 20% saying they prefer guaranteed returns (versus 14% of men) and 44% preferring stable, reliable returns (versus 35% of men). The report also showed that women review their investments less often than men.2

For super, this often means sticking with default or conservative investment options even if they’re not the most appropriate strategy for a woman’s financial situation or stage of life. It can result in missing out on investment returns and emerging opportunities, which will impact their super balance.

How women can grow their super

With careful planning and the right guidance, it’s possible for women to close the gender super gap and ensure a comfortable retirement down the track. 

We’ve put together some tips to help everyone give their super a boost. These tips might be appropriate for you, or you might want to share them with some of the women in your life to help them secure their future financial wellbeing.

Four ways to boost your super

1. Work out how much you’ll need

The first step is to set a clear goal for your retirement by calculating how much super you may need. The Moneysmart website has some handy calculators to help you do this, including how your super might be affected by a career break or reduction in work hours.

2. Learn more about how investments work

If you want to maximise your super, you should start by finding out how it is invested – and whether your portfolio will help you achieve your retirement goals. By learning more about how investments work, you’ll also feel more confident making super decisions.

3. Make additional contributions

There are plenty of strategies you can use to top up your super – this is particularly important if you are taking a career break or moving into part-time work, so you can make up for the impact on your super balance. You can make extra contributions into your super from your before-tax salary, up to $27,500 a year, by setting up a salary sacrifice arrangement with your employer. You are also allowed to make additional after-tax contributions (these are known as non-concessional contributions) of up to $110,000 per year. 

4. Seek professional advice

Because super rules can be complicated, it’s often challenging to navigate your options on your own. That’s why it’s best to get professional advice from an expert, such as a financial adviser. They can help you set goals for your super and develop a tailored strategy to reach them, as well as letting you know about any government incentives you might be eligible for to give your super an extra boost.

1Australian Bureau of Statistics, 4125.0 - Gender Indicators, Australia, Sep 2018.  
2ASX, Australian Investor Study, 2020.

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