Women live five years longer than men on average – yet they are more likely to live in poverty and experience economic insecurity in retirement.
The five reasons why women retire with 47 per cent less money than men – and the possible solutions – according to makesuperfairer, are:
Gender Pay Gap
Fact: Australia’s gender pay gap has sat at between 15 per cent and 19 per cent for the past 20 years, and is a major contributor to the significant superannuation difference between men and women.
Solutions: Legislate pay parity, introduce more flexible working arrangements, extend paid parental leave, and increase pay in sectors that attract more women, such as the childcare sector.
Workforce Participation
Fact: More women are in the workforce and, encouragingly, the gap in participation rates between men and women has lessened from 17.8 per cent in 2001-02 to 11.1 per cent in 2016. More women than men seek part time and casual work, which hits the super. An estimated 220,000 women miss out on $125 million in superannuation contributions as they do not meet the $450 per month before tax super threshold.
Solutions: The Federal Government must remove the $450 monthly income threshold on superannuation contributions and ensure that women in part-time and casual roles – or women who have multiple jobs – are paid superannuation. More flexible working arrangements, such as the option to work from home, childcare facilities at work, greater flexibility around work start and finish times, and job-sharing options, would also encourage greater workplace participation.
Motherhood and Caring Responsibilities
Fact: Women in Australia continue to take on the bulk of caring responsibilities for children, elderly relatives and other family members, including people living with dementia or another illness. While stay-at-home dads account for just four per cent of fathers, 31 per cent of mothers stay at home.
Solutions: Once again, more flexible working arrangements must be part of the solution, while attitudinal shifts towards working mothers and fathers, as well as traditionally ‘female’ caring role. More childcare subsidies would also help.
Super Inequalities
Fact: Women are penalised during maternity leave as no superannuation payments are made. This is unlike all other types of leave, where employers are still required to pay super.
Solutions: Superannuation payments must become part of the Federal Government’s Paid Parental Leave scheme.
Taxation Policy
Fact: The taxation system for superannuation favours high earners. The Federal Government spends $30 billion annually on super tax concessions that mostly favour high income earners. Women receive only one-third of Government tax concessions on super, with the bottom 30 per cent of income earners (most of whom are women), getting nothing. Meanwhile, the top 20 per cent of income earners get $10,000 every year.
Solutions: Low-income earners aged 25 and over receive a $1,000 per annum Government contribution into their superannuation until they reach a super balance of $100,000 in order to address inadequate retirement savings. The estimated cost of this scheme is $2.7 billion per year, and would increase low-income earners’ super balance by almost 15 per cent. In addition, the Government could consider removing tax concessions for the top 20 per cent of income earners and redirect the funds.
They are simple solutions – but ones that could make a big difference to how many women enjoy their retirement.
