Australia's superannuation system is failing women

The Australian Services Union (ASU) have released their findings from two surveys about retirement security, and they believe the results show that Australia’s compulsory superannuation system is “failing women”.

Figures released show that:

• Women are retiring with around half as much (53 per cent) superannuation as men.
• Over 70 per cent of women have estimated balances under $150,000 while less than 38 per cent of men do.
• 23 per cent of men have balances over $500,000 while less than four per cent of women hold such balances.
• Almost a quarter of all women have balances less than $50,000.

These ASU results are also reinforced by data from the Australian Bureau of Statistics, which confirmed that women’s superannuation balances are systematically lower than men’s, and that the gap increases throughout their working life.

These results probably come as no surprise to Australian women who on average reach a superannuation balance of less than $80,000 at retirement (ABS figures):

Why are women retiring with less?

There are three reasons, according to the ASU report, that Australian women are retiring with significantly less than men.

The motherhood gap

The ASU report examined several factors that contribute to superannuation contributions and found that the biggest impacts were all caused by parenthood.

“Mothers are more likely to have characteristics in many… variables [impact of age, education, relationship status, number of children, industry, occupation, hours worked, time taken out of work, debt, household income and pay rate] that reduce their income (and therefore superannuation) than fathers or men and women without children,” the report states.

“In almost every aspect of the gender pay gap and the superannuation gap we find that being a parent is negatively associated with women’s pay and super while it is positively associated with men’s pay and super.

“When couples have children, the woman usually takes more time off work than the man and she also is more likely to return to part-time work than full-time.”

Part-time work

A far greater proportion of women work part-time than men. Reduced hours, often influenced by a woman’s role as caretaker (chosen member to take care of children or sick or elderly family), are a substantial factor determining the superannuation gender gap.

Caretakers often must elect to work fewer hours, and if you are working fewer hours are being paid less super.

The gender pay gap

According to the Workplace Gender Equality Agency, the gender pay gap is the “difference between women’s and men’s average weekly full-time equivalent earnings, expressed as a percentage of men’s earnings. The national gender pay gap is currently 16.0% and has hovered between 15% and 19% for the past two decades.”

As retirement balances are almost entirely determined by compulsory contributions based on 9.5 per cent of a worker’s salary, the superannuation gap is largely influenced by the gender pay gap.

This is different to accumulating less superannuation due to taking on part-time work, as even full-time working women with children earn a lower salary on average:

These results from ASU are alarming, and for millions of women it could mean the difference between retiring comfortably and falling into poverty.

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