- On 06/03/2020
International Women’s Day is on Sunday 8 March, and it is worthwhile reflecting on the progress made by women in building their superannuation accounts.
We all know the reasons for females retiring with lower income than males:
- Lifecycle events – including bearing and raising children, and supporting aged parents later in their careers.
- Barriers – including the gender pay gap and higher longevity than men.
- Attitudes – including the lack of senior roles in the workforce (partly caused by missing promotions whilst on maternity leave).
It is now four years since the Senate Economics Reference Committee released its report into the Economic Security for Women in Retirement¹. The report, subtitled A husband is not a retirement plan, made 19 recommendations, most of which have not yet been accepted by government.
The current Retirement Income Review has received more than 280 submissions, and many have made similar recommendations, showing that the issues are still pertinent.
Poverty in Retirement
Two key factors give a better chance of living a comfortable retirement – marriage and home ownership. At present, about 70% of retirees are married and about 80% are homeowners, and the system works well for this group. However, with high divorce rates and ever-escalating property prices, we expect these percentages will fall in future.
According to Mission Australia in its submission, retired homeowners have the same rate of poverty as the general population (about 12%) but the rate for renters is an alarming 43%.
This is not good for females! The Women in Super submission noted that:
- One in three women have no superannuation.
- 40% of older single women live in poverty.
- The fastest growing cohort of the homeless is single older women.
- Women have been retiring with far less superannuation savings than men.
Those who retire with lower balances are at a much higher risk of encountering poverty during their retirement, and one key objective of the superannuation system should be to address and reduce the number of retired impoverished people.
What steps can we take?
There is not much we can do to help people find a partner before they retire but there are many ways to help women build their superannuation. Here are the suggestions we made in our response to the Senate review back in 2015, all of which still apply today:
Women who have already retired
Many of Australia’s female pensioners had little superannuation when they retired. They had a number of disadvantages compared with their daughters:
- On average, they had larger families which led to lower workforce participation (and less superannuation).
- They would have received compulsory employer superannuation only towards the end of their careers or not at all.
- On average, they retired three years earlier than men.
- 70% would have been married at the time they retired so they shared the same financial position as their partner. However, women live longer than men (on average) so many become widowed later in life.
We recommended the following steps from government, noting that many of these will also be applicable to males:
- Review the situation with female single Age Pensioners, particularly those who rent. Raising the rental assistance, reviewing the settings for means-testing, and providing more public housing are some solutions.
- Change the superannuation tax concessions so they are more equitable, particularly for low income earners.
- Remove the $450 threshold for SG payments.
- Consider providing tax deductibility of financial planning delivered through superannuation funds.
- Allow joint superannuation accounts for married couples.
- Provide 15 hours a week free Child Care for three and four-year-old children, and provide Child Care facilities attached to primary schools.
- Amend Sex Discrimination legislation to allow employers to make additional superannuation contributions in respect of their female staff without the need for specific approval on a case by case basis.
- Expand education and advice services to members.
- Improve investment strategies for retirees.
- Superannuation funds should seek to invest in areas of growth caused by demographic change. For example, public housing for the aged, retirement villages, aged care facilities as well as businesses and research within the health industry.
- Encourage employers to pay extra superannuation contributions for female staff (which is a component of our Valuing Females Policy).
- Provide paid parental leave.
- Pay SG to staff who are on parental leave.
- Provide incentives to return to work after taking maternity leave, such as flexible working conditions, including part-time roles, opportunity to do some work from home and ability to take additional unpaid annual leave.
- Mentor and support females into management roles. According to the Workplace Gender Equality Agency women hold 14.1% of Chair positions and 26.5% of directorships and represent 17.1% of CEOs and 31.5% of key management personnel². Currently at Rice Warner our Board has 40% representation of women and 50% at the Executive level.
- Consider opportunities for women over 55 to remain in the workforce, perhaps on a part-time basis.
- Provide Child Care facilities where practical.
- Be supportive of males who want to share Child Care duties.
Individuals can improve their retirement situation by:
- Making voluntary contributions.
- Working part-time late in life and deferring retirement.
Society needs to value (with better pay) occupations which are female-centric, such as nursing and teaching.
There also needs to be an attitudinal change regarding the sharing of Child Care and domestic duties between partners
Closing the superannuation gender gap is likely an issue that will require structural change and community action. Any major solutions will take many years to have an impact, but incremental changes can have a material impact on the retirement prospects of women across Australia.
Following the adoption of our Valuing Female Package in 2014, one-third of our female staff now make voluntary contributions to their superannuation.
For those who do nothing, women will continue to be an untapped resource.