In launching the report Not so super, for women: Superannuation and women’s retirement outcomes” by David Hetherington and Warwick Smith on July 20, Australian Services Union (ASU) national secretary David Smith said: “Australia’s compulsory superannuation system is failing women. According to the latest figures, women are retiring with around half as much superannuation (53%) as men.”
The ASU is the union covering low-paid, mainly women workers in the community and disability sector, as well as clerical workers in a number of industries, including local government.
The ASU has conducted two major surveys of its members about retirement security, but it realised the search for solutions required further study. In a major research collaboration, Per Capita and the ASU surveyed more than 4000 workers and analysed the data to examine the causes of the gender superannuation gap.
The report identified a confluence of diverse circumstances: “An inadequate age pension, overrepresentation in lower-paid occupations, the gender pay-gap, no super at low pay levels, effective marginal tax rates, carer responsibilities, unpaid domestic work, the complexity of the super system and frequency of changes to it, age discrimination, unaffordable housing, longer lives, poor financial literacy, cost/availability of childcare, relationship breakdowns and casualised work.”
But it found the most significant reason for the superannuation gender gap is motherhood. “While mothers suffer a very substantial pay and superannuation penalty compared to women without children, fathers receive a super and pay bonus, earning more and accumulating more super than men who are not fathers.” said one of the report’s authors, David Hetherington.
“Their work is more intermittent and lower paid than that of their male counterparts. Combined with the fact that they still do the overwhelming majority of unpaid housework, parenting and caring, this has meant that the benefits of super have not flowed to women.”
The focus in the first part of the report on qualitative data revealed the lived experience of women ASU members facing retirement. The report stated: “For many women, retirement looms as a frightening prospect. Their financial circumstances will dictate that they live fortnight to fortnight, far below income standards that are considered comfortable or even modest. The women we spoke to were blunt about their outlook...
“There is a strong and widely held view among women that they are being severely let down by Australia’s retirement income system. Despondence about their future financial circumstances is a persistent theme, and many women see poverty as an unavoidable part of their future.
“They feel the system disproportionately favours men and the rich, and that it is deliberately ‘geared’ to do so. Women do not believe these outcomes are unintended consequences of the superannuation system. Instead they believe the system is unfairly stacked against them.”
Data from the Australian Bureau of Statistics confirms that women’s superannuation balances are lower than men’s and the gap increases throughout their working lives, reaching $70,000 by the age of 65. The median women’s superannuation balance immediately prior to retirement is less than $80,000, which would fund about three years’ retirement even on the most basic living standard
Smith said: “This report provides policy initiatives that are simple, achievable and measurable recommendations that we believe will, over time, greatly improve the superannuation outcomes for women in Australia.”
Central to these recommendations is the idea of an “accumulation pathway” that maps the amount a person should have in their superannuation balance at any given age to achieve a basic living standard in retirement.
The report recommends tracking all superannuation balances to intervene for those who are falling behind an acceptable accumulation pathway. Such interventions could include government top-ups, tax relief, superannuation account fee discounts and the inclusion of a superannuation component to Family Tax Benefit B.
Other recommendations include the re-establishment of the Office of the Status of Women; inclusion of superannuation payments in carer payments and all parental leave payments; retention and expansion of the Low Income Superannuation Tax Offset; suspension of superannuation fund fees during parental leave; and the need to reduce the very high effective marginal tax rates faced by women due to the combination of taxation and withdrawal of family payments.
The report also highlights the fact that for many women, the changing structure of work means that superannuation is not even an option. It said: “Superannuation is predicated on the fact that every worker is an employee. But the rise of non-standard work means that almost a quarter of female workers (23%) are … casuals, contractors, subcontractors, labour-hire workers, self-employed or on zero hours contracts.
“In all of these arrangements, superannuation is less likely to be paid. Women are overrepresented in the industries where these forms of precarious work are most common, with the result that the growth of these forms of work hits women’s retirement incomes hardest.”