How women can achieve a stronger financial future
21 April 2021
5
min read
Women in Australia are retiring with a quarter less super than men, with many women receiving far fewer years of employer contributions to retirement savings than men do.
Research1 released in March for 2021 International Women’s Day shows only around 25% of women will retire with 40 years of employer super contributions.
This means three-quarters of women are unlikely to retire having received a full 40 years of super contributions over their working life, which significantly impacts retirement balances.
The news is worse for the bottom fifth of female wage earners, who have a less than 5% chance of receiving four decades worth of super contributions.
Overall, women across all income brackets average just 30.1 years of super contributions. The average for men was 36.2 years.
The super gap between men and women
Industry Super Funds Australia research shows that the median super balance for a woman in her early 60s is $131,352, which is well behind the male median of $177,882.2
Latest figures show that in total, men in Australia have $282 billion more than women in their super funds.3
Men also receive $12 billion more in Super Guarantee employer contributions each year than women.
While women not only have less super, women are also more likely than men to have no superannuation coverage at all. The Association of Superannuation Funds of Australia4 calculates that, at retirement age, 23% of women have no superannuation, compared to 13% of men.
Why women fall behind in super
Australia’s gender pay gap, that measures the difference between women’s and men’s average weekly full-time equivalent earnings, is one factor that translates into a superannuation gap when women retire.
Sitting at 14.2%,5 the gender pay gap means women earn on average $261.50 per week less than men. When the part-time workforce is added to the calculations, the total earnings gender pay gap for all employees widens to 31.3%. This means women’s average weekly total earnings are $486.20 less per week than men.
As well as the gender pay gap, the length of time you receive contributions to your super from your employer can contribute to the superannuation gender gap.
Other factors that contribute to poorer retirement savings outcomes for women compared to men may include:
- Women often take primary responsibility for family care and therefore are more likely to have fragmented work patterns of paid work.
- A majority of part-time and casual workers are women in generally lower paid positions.
- Women disproportionally work in administrative roles, community services and sales which historically pay less than male dominated occupations.
- Fewer women occupy senior executive and board level positions.
- Women typically retire earlier than men on average and live longer than men - on average about 4 years longer for a woman born today.
5 actions you can take to boost your super
Take five simple actions today to help grow your super.
Australians have billions of dollars in unclaimed super.
Lost super is money which is held on your behalf when your super fund, your employer or the government can't find an account to deposit your super into.
QSuper aims to make it easy for you to search for lost or forgotten super and combine it6 into one account through Member Online.
Through Member Online, you can search for a full list of any super accounts you have with other super funds and any ATO-held super that may belong to you. There are no paper forms to sign or mail in.
Salary sacrificing into your super means having some of your salary or wages paid into your super fund instead of to you.
It may benefit you as your super fund will tax these contributions at 15%, which is the same as your employer's contributions. (Although certain, higher incomes are taxed at 30%). For most people this will be lower than your marginal tax rate and means you benefit because you pay less tax while boosting your retirement savings.
In a further benefit to you, the sacrificed component of your total salary package is not counted as assessable income for tax purposes. This means that it is not subject to pay as you go (PAYG) withholding tax.
You can simply talk to your employer about arranging to salary sacrifice to your super if it is right for you.
Even small amounts from your after-tax pay each week or month may make a big difference to your savings, and you may be eligible for a tax deduction.
A voluntary after-tax super contribution is money you choose to pay into your super fund from your after-tax income or savings and is different from salary sacrificing which happens before your income is taxed.
Choosing the right investment option for you can make a big difference to your retirement lifestyle.
Your investment choices will probably change over time. What’s right for you at age 25 may not be right for you as you get closer to retirement when you may want a more stable option to give you certainty over your future finances.
Take the opportunity to consider the mix of each asset class that best suits your circumstances.
Keep your goals on track
Make smart decisions with the help of a professional financial adviser.*
* Deciding what is best for you will depend on your personal circumstances and you may want to seek personal financial advice to get the most from your superannuation. You can find out more about financial advice options at qsuper.qld.gov.au/advice
1. Media release, 8 March 2021, Industry Super Australia, Crucial government retirement modelling fails to reflect women’s interrupted careers, at industrysuper.com
2. Media release, 30 August 2021, Industry Super Australia, Gender super gap to span decades, at industrysuper.com
3. Media release, 12 March 2020, Industry Super Australia, It’s time to end the gender super gap, at industrysuper.com
4. Workplace Gender Equality Agency, February 2020, Women’s economic security in retirement, at wgea.gov.au
5. Workplace Gender Equality Agency, 27 August 2021, Australia’s Gender Pay Gap Statistics, at wgea.gov.au
6. Before you consolidate your super, please consider if withdrawing savings from your current fund/s could lock in a previous investment loss. You should also check with your other fund/s if you will lose access to benefits such as insurance or pension options, if the other fund/s will charge you exit penalties or fees, or if there are tax implications.
The views and opinions of the author and those making comments are theirs alone, and do not necessarily reflect the views of the QSuper Board. No responsibility is taken for the accuracy of any of the information supplied and you should seek advice for your circumstances.