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Mind the gap: how women can boost their super
Brought to you by Rest
By Simon Webster
As women approach retirement, a lifetime of gender inequality can often come into sharp focus. Women aged 60 to 64 have a median superannuation balance that is 28 per cent lower than men’s, according to a 2021 report by KPMG.
The gender gap impacts superannuation.Credit:iStock
Among the members at Rest super, the gender gap is at similar levels. “Beyond the statistics, it means that these members often face insecure retirement and even financial distress,” says Rest CEO Vicki Doyle. “When we’ve surveyed members approaching retirement, many told us they had low expectations of retirement, with most worrying about not having enough money.”
Some of the causes of the super gender gap include:
- Unequal pay. Women in full-time work earn 8 per cent less than men, and women are more likely to do part-time or casual work.
- Breaks from work for unpaid caring duties. Research conducted by Rest in 2017 found that “women were more than twice as likely as men to have taken a break to care for a family member, and nearly six times more likely to reduce their work hours due to parenting duties”, Doyle says.
- Childcare costs. More affordable childcare could close the gender super gap by 20 per cent, says a report by Industry Super Australia.
“The superannuation system was designed with assumptions about people’s working lives,” Doyle says. “It wasn’t designed with people who work casually or part-time in multiple jobs in mind. There’s no mechanism in the system to recognise periods of unpaid work.
“These workers can often have less secure incomes - so they are at greater risk of poorer retirement outcomes. And this workforce is predominantly made up of women. Really, we should be designing the system around them.”
What can you do about it?
Legislative changes are helping. From July 1 the superannuation guarantee will apply to workers earning less than $450 a month; and super accounts are now stapled to members when they switch jobs, preventing unintended multiple super accounts and multiple fees. Divorce transparency laws introduced this year have also made it harder for men to hide their super.
There’s plenty more that could be done by government and employers, Doyle says, such as introducing super payments for parental leave, reforming the childcare subsidy, and addressing the gender pay gap and flexible work arrangements.
“The Commonwealth parental leave pay schemes currently do not include superannuation guarantee payments. This needs to change to contribute to greater equity in the system,” Doyle says.
“It’s going to require more than just changes to superannuation. We are only going to solve the inequity of women’s financial security and retirement outcomes if we address the inequity of pay and barriers to women’s participation in work.”
But individuals can also take action to improve their super balance. Here are some of Doyle’s tips for closing the gap:
1. Make spouse contributions
“If you’re taking a career break, your partner could consider a spouse contribution into your account to help it stay on track while you aren’t receiving contributions from an employer,” Doyle says.
Spouse contributions can not only help to even up a couple’s balances, but provide potential tax benefits too. If you earn less than $37,000 a year and your partner makes a voluntary contribution into your super, they can claim a tax offset of up to $540.
2. Make voluntary contributions between career breaks
”When you return to work, you could consider making additional voluntary contributions to make up for the periods where you weren’t receiving any super,” Doyle says.
Contribution options include pre-tax salary sacrifice arrangements, and post-tax voluntary contributions, both of which can offer potential tax benefits.
Make voluntary contributions between career breaks.Credit:iStock
3. Check your insurance and nominate a beneficiary
Most career breaks are planned. The last thing you need is an unplanned one due to illness or disability. But it does happen, and it can pay to be prepared.
“You and your partner should check if you have insurance in your super and if it’s appropriate for your needs,” Doyle says. “Consider what you’d need if you or your partner couldn’t work due to illness or disability.
“You and your partner should also check and nominate a beneficiary for your super.”
4. Get educated about super
Taking control of your super is crucial if you want to close the gap and secure your financial future, Doyle says. Rest’s Women and Super educational webinar is a good place to start.
To find out more about closing the gender super gap and how you can take action, visit rest.com.au/super/understanding-super/women-and-super
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