Women earn less, often for the same work, have additional responsibilities which result in career and superannuation contribution breaks, and live longer in retirement. It is then not surprising that women have, on average, significantly smaller super balances to rely on in retirement.
Prior to the introduction of the superannuation guarantee in 1992, superannuation was the preserve of well-paid men. Some women will still recall when there was, in some industries, a prohibition on married women working. There was no chance that when they did work, they would receive the same wages as male ‘bread winners’. The latest figures and research show that these bad old days are not a distant memory.
A recent Senate Committee finding found that the disparity between men’s and women’s superannuation balances on average over life is 45.7 percent or $37,749, and at certain age points rises to a staggering 70.1 percent. This is not a legacy issue. The bi-partisan Committee found that the super gender gap is expected to change little over the next 40 years.
In a submission to the Government’s consultation process regarding the purpose of superannuation, KPMG made certain observations regarding women’s inadequate superannuation balances. KPMG submitted that women earn less than men because:
KPMG has recommended specific measures to further boost women’s retirement savings. These include, but should not be limited to:
The KPMG submission to Government regarding the objective of superannuation argued that retirement income parity for women with men can only be substantially addressed by addressing the wider socio-economic inequities that result in women earning less income than men. The recent Senate Committee report clearly shows that we still have a long way to go.
In its 2016 Budget the Federal Government has announced several welcome changes that will go some way to improving the retirement incomes of women and other low income earners.
Tax offsets associated with contributions to low income spouse accounts, most of which are accounts held by women, will be extended with eligible recipient’s income limits increased from $10,800 to $37,000.
The Government has also announced changes which will allow those with superannuation balances of less than $500,000 to rollover their unused concessional cap amounts for a period of 5 years.
These two measurers are intended to partially address women’s low account balances as a result of broken work patterns.
Two thirds of those with low income balances are women. The reversal of the Government’s decision that it would end the Low Income Superannuation Contribution (LISC) will primarily assist women. The new Low Income Superannuation Tax Offset (LISTO) scheme is identical to LISC is all but its name.
The Government’s budgetary announcements are welcomed as they address many of the KPMG proposals and the recommendations of the bi-partisan Economics References Committee. However, much more needs to be done to remove the gender retirement incomes gap.
In our submission to Treasury on Superannuation, we outline a series of proposed changes to make the superannuation system fairer and stronger.