Solving the gender super imbalance

Solving the gender super imbalance

Women are still retiring with significantly less super than men, and KPMG Partner Paul Howes argues that without urgent action, this will endure too long.

Partner, Head of Wealth Management Advisory

KPMG Australia


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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.

KPMG view

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:

  • women are more likely to be employed on a part-time and/or casual basis than men and earn less than men in similar occupations; are more likely to have broken work patterns due to primary carer responsibilities; and are more likely to work in lower paying occupations
  • the Senate Economic References Committee report finds the same factors result in the significant gender retirement savings gap
  • the KPMG submissions suggested that there are a number of measures that could be taken that would, at least in part, address the gender retirement gap. These include measures to boost the contribution levels of low income earners, many of whom are women, such as Low Income Superannuation Contribution; the level of Superannuation Guarantee payments and the income threshold when superannuation is paid which is currently $450 per month.

KPMG has recommended specific measures to further boost women’s retirement savings. These include, but should not be limited to:

  • applying the superannuation guarantee to income replacement payments such as paid parental leave and workers compensation payments and 
  • the introduction of limited exemptions from concessional and non-concessional capping arrangements to allow women to boost their superannuation contributions to compensate for periods out of the workforce, changed family circumstances, including divorce, financial separation and reduced contributions generally.

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.

Government 2016 budget response

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.

Objective of Superannuation: KPMG’s submission to Treasury

In our submission to Treasury on Superannuation, we outline a series of proposed changes to make the superannuation system fairer and stronger.

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