Historically, super wasn’t available to everyone. In 1985, 24% of working women had super.
It wasn’t until 1992 that compulsory super for all was introduced.
Over the years, direct and indirect discrimination has exposed specific sectors of the Australian population, particularly older generations and women, to reduced financial security in retirement.
It’s 2021 and Australia’s gender pay gap is stuck at 15%[i]; despite laws promoting better gender equality and evolving attitudes, women are still often paid less than men. Yet, the super gap is greater than the pay gap.
According to Industry Super Australia, on average, women retire with around half[ii] as much super as men.
Why do women accumulate less super?
Structural and cultural biases, workplace barriers, and interrelated family, work and social factors impact women’s ability to earn and accrue super for retirement. Some key factors include that women:
- Earn less than men [iii]
- Do more unpaid work[iv]
- Are more likely to have part-time roles; and
- Face return to workforce barriers[v]
Compulsory superannuation provides women with greater access to retirement savings, but the current framework doesn’t address particular challenges women face in the workplace. For example:
- The $450 earning threshold
An employer is not required to pay super to an employee who earns less than $450 a month. - No Superannuation on paid parental leave
The paid parental leave scheme does not attract superannuation. This will also impact men who opt to take parental leave.
Let’s start working together to help close the gap!
For many of us, super might not be a priority when we are young, and it’s something we worry about closer to retirement. By making small changes now you will see a significant impact on your financial situation at retirement as demonstrated in the below example:
Even though they retire with an approximately similar amount of money, Denise only needs to contribute 2% of her salary from age 30, just over $50 per fortnight. Whereas Rose, despite having a considerably higher income, is not really starting her super journey until age 50. To achieve the highest retirement nest egg she has to contribute 6% of her salary – a much higher commitment at more than $200 per fortnight. It is never too late to start. The earlier you start making additional contributions, the better off you may be.
Contributing sooner rather than later
Compounding interest means the longer your money is invested, the more interest you make. Boosting your own or your spouse’s super is a way to help close the super gap.
Together with the favourable tax treatment afforded to super, compound interest is one of the main reasons investing through your super for retirement is so powerful.
Challenging the super gap
legalsuper exists to empower all members to make informed choices leading to better outcomes in retirement. Reviewing fees, consolidating accounts, making an investment choice, tailoring insurances and estate planning are key actions one should consider. We are working hard to help close the super gap and increase the long-term financial security of our members.
To help you understand your super and thus achieve the best possible retirement outcome, we want you to know that we are here to assist and guide you on this journey. legalsuper’s Perth-based Client Service Manager Helen Hermans is available for one on one consultations in Perth. She can also connect you with other highly experienced superannuation professionals from the legalsuper team, Australia wide. To arrange a meeting with or be connected to a member of legalsuper’s team, contact Helen directly on 0475 999 122 or email her at [email protected]
Legal Super Pty Ltd ABN 37 004 455 789 is the Trustee of legalsuper ABN 60 346 078 879, AFSL 246315. This is general information and does not consider your personal needs. Past performance is not a guide to future performance.
[i] https://www.wgea.gov.au/publications/australias-gender-pay-gap-statistics
[ii]2018 https://www.industrysuper.com/media/closing-the-gender-pay-gap-wont-close-the-super-gap-new-analysis-of-abs-data-reveals/
[iii] The Workplace Gender Equality Agency (WGEA) calculates the national gender pay gap using Australian Bureau of Statistics’ Full-Time Adult Average Weekly Ordinary Time Earnings data from the Average Weekly Earnings survey (cat. no. 6302.0).
[iv] https://aifs.gov.au/aifs-conference/fathers-and-parental-leave
[v] https://humanrights.gov.au/our-work/3-theme-one-economic-independence-women-listening-tour-report#heading3_5