Closing The Gap - Women’s Superannuation
In Australia, men and women earn comparatively until they’re 28.
After age 28, female earnings flatline as they take on the majority share of unpaid care to start a family or care for a family member - while men’s increase steadily.
Earnings for women almost halve after the first baby, and the trend continues with additional children. To prioritise such care, women take significantly more career breaks and often part-time or lower-paying work.
The Australian Government only introduced paid parental leave in 2011, with the Paid Parental Leave Scheme ensuring up to 18 weeks of pay at minimum wage. However, it is not compulsory for any employer to pay for superannuation within this scheme.
In addition to government-funded parental leave, many employers set their own paid parental leave policy, at their discretion. With individual company policies varying across the board, many women break from their roles with completely different or even no additional support.
In combination with the above factors along with the current gender pay gap of 19% on average, such interruption to the accumulation of superannuation means that Australian women retire on average with 47% less super than men.
The Great Divide
46.9% of the workforce are women, yet women currently retire with 47% less superannuation than men
Women take on average 5 years out of the workforce as unpaid carers, causing their super savings to fall behind
There is no requirement for superannuation under the Government Paid Parental Leave Scheme
Employer parental leave schemes vary across the board, some with no additional support
43% of women work part-time. Women who do work full-time earn 19% less than men
Part-time employment is less likely available in senior management roles, availability is estimated to be less than 10%
44% of women rely on their partners’ income as the main source of funds for retirement
Closing The Gap
Making the decision to take time out from the workforce is never done lightly. There are a few ways to ensure superannuation continues to grow while taking an important break.
Choose
It’s important to choose the right super fund, with consideration on long term performance, member’s profits and fee structure. Check over your super fund structure to make sure it’s the right one for you.
Locate and Combine
According to the Australian Tax Office (ATO), Australians amassed almost $20.8 billion in lost and unclaimed super as of November 2019.
Having one super account can help save on fees, avoid duplicate insurance policies and make management easier. Find and locate any lost super using the ATO online services through myGov.
Extra Contributions
To help compensate for a dip in income, consider salary sacrificing before taking time off. Salary sacrificing could also reduce taxable income, which means paying less at tax time.
During time off, or returning to part-time work, you may be eligible for a super co-contribution of up to $500 from the Australian Government with a yearly income of less than $53,564 (before tax) and other eligibility requirements. This co-contribution gets paid directly into the super account after the tax return is lodged for that year.
Lastly, If you have a partner who will continue to work you may be able to grow your super balance with spousal contributions. If you’re earning less than $40,000 income during the financial year, your spouse may be eligible for a tax rebate of up to $540.
Advocate
There are companies that are working towards changing the status quo through awareness and advocating policy change.
For example, not-for-profits Women in Super and the Australian Gender Equality Council focus directly on campaigning for superannuation equality.
Researching, clarifying and spreading the word can help address inequalities in workplace culture and superannuation.
IN CONCLUSION
The current superannuation system in Australia, which is tied to paid work, creates significant inequalities in superannuation for those who leave the workforce for unpaid care.
Not having enough super may affect the retirement income and lifestyle we want to lead in our later years.
For individual advice on your particular superannuation goals, please do not hesitate to reach out to Shape Financial.
*Statistics by Women in Super - Facts about Women in Super - https://www.womeninsuper.com.au/content/the-facts-about-women-and-super/gjumzs