Our current superannuation system can be reformed to close the gender gap in retirement savings, according to new research by the Association of Superannuation Funds of Australia.
In 2011, the average man had a superannuation balance of $197,000 at retirement. For women, this figure was $105,000.
This $92,000 gap in retirement savings between women and men has widened since it was last calculated in 2006.
A recent study identifies four ways our superannuation system can be redesigned in order to help boost savings for women.
The first is to continue superannuation payments for employees who have to spend time out of work – particularly to care for their families.
“We have advocated that any paid parental scheme should include the Superannuation Guarantee, so if this was to be legislated it would be a great way of helping boost women’s super,” ASFA spokesperson Lisa Chikarovski told Women’s Agenda.
“We know that women are disadvantaged when it comes to accumulating super due to the time they spend out of the workforce caring for children or family. Even just six months of SG applied to the paid parental leave of a 35 year old woman earning $50,000 could add an extra $10,000 to their final super balance.”
ASFA has also recommended that Australia remove the threshold for compulsory contributions to an employee’s super fund.
The $450 per month threshold for superannuation contributions penalises low-income earners, part time workers and workers with multiple jobs – all of whom are more likely to be women than men.
“ASFA estimates that around 250,000 individuals, the majority of them women, would benefit from the removal of the threshold by receiving higher retirement savings,” the research said.
The study also proposes that employers should be able to contribute more to the superannuation accounts of women than men to help close the gap.
Employers would be able to apply to the Sex Discrimination Commission to pay more in super to women without breaking anti-discrimination laws.
Superannuation and wealth management consultancy firm Rice Warner has already applied to the Commission for an exemption and currently contributes 2% more to the super balances of its female employees than its male employees.
Finally, the research advocates providing superannuation insurance on an opt-in, rather than opt-out, basis in order to stop insurance fees diminishing the retirement balances of lower income earners.
“I am a feminist because I know that the number of older women retiring with less superannuation than men is not because they are worse savers,” Tanya Plibersek wrote in Fairfax Media this morning.
Plibersek is right – the retirement gap does not reflect the fact women are worse at saving, it reflects the cumulative toll of several structural disadvantages. The four-step overhaul could correct elements of the superannuation system that have led to a large and widening gender gap in retirement wealth.