CHOICE membership

Closing the super gender gap


#1

One way to close the superannuation savings gap between men and women would be to keep paying super to women when they go on leave to have children – one of the main reasons that women’s super accounts end up somewhere around $80,000 poorer than men’s at the end of their careers.

The suggestion was made by Dr Carly Moulang from the Monash Business School, who recently unveiled new findings about the perennial problem. Research from 2002 gleaned from the super consultancy Mercer Australia by the Monash research team showed that the youngest cohort of women suffered from an average super gender gap of $1142 while the oldest group was $21,889 behind. When the 2011–12 data was checked, the gap had widened to $18,608 and $81,769 for the respective age groups.

“We found that the young cohorts experienced more gaps in their contributions as they are more likely to be establishing their family around this time, where the more stable 44–46 year olds did not have as
many gaps,” Moulang says. “At 24–26, generally around the time of one’s first professional job, graduate employment rates are high for women but their salaries are lower. This has a significant long-term impact on women’s superannuation balances from which they cannot recover.”

“Much of the recent response to gender inequalities in pension savings has been to encourage women to save more,” Moulang adds. “This is an inadequate response that will not bridge the gap revealed here. Our study provides clear evidence of the Australian labour market generating a statistically significant economic disadvantage for women over time.”


#3

I do have issue with the above, as there are also many men (about 5-10%), who stay at home and look after the children. Choice should be supporting primary child carers rather than women carers only. While there are more women who chose to be the primary carer, one shouldn’t forget men who also chose to do the same. Not doing so, promotes discrimination.

Men who are primary carers also have super impacts as well.

It shouldn’t be about paternity verses maternity, but for paternity AND maternity.


#4

Thanks @AndyKollmorgen for starting the discussion.

How easy is it to effect change and provide greater financial equality between men and women? It is broader than just super and the impacts of parental leave.

As @phb suggested there is a risk in assuming a universal stereotype in any relationship. It would appear best if any change applies without creating a new inequality. What about same sex relationships or single parent circumstances. That could include male partners who have lost their partner shortly after birth of the couples child.

Addressing the gender pay gap may be the best long term solution. Being able to contribute super while on parental leave would help build up the balance. Who would fund the contributions? It’s unlikely to be the employer? Perhaps a voluntary contribution treated for tax purposes the same as the compulsory payroll deduction would be in order?

Other significant shortfalls are not about gender impacts on super savings. Aussies in low paying work and those with chronic unemployment are also disadvantaged. Ultimately any change to the super system would need to consider this needs also.


#5

Super is a slow moving train crash - taking 50+ years. When I started work in the 1970’s there was no compulsory super, females were paid about 2/3rds the male wage for exactly the same work, overlooked for promotion and training because “she’ll just get married and have kids …”, I paid my own Uni fees and got promotion by changing job (and town), joined the Qld Public Service, where women could not contribute as much as men - our Super contribution was lower and our pay-out assumed we were a dependant (ie our husbands supported us and our children), so were unable to build a better nest egg. This partly explains the gender pay/Super gap for those retiring now.

I was fully employed up to my mid 50’s when my male dominated industry started to tell me I was too old - yes they employ young women, mostly in “soft” jobs, but although I am highly experienced, fit, mentally capable, there are no jobs, even lower paid ones (“too qualified, you’ll be bored …”). I wanted to work till I was 70, instead, after 55 I got sporadic casual work, which dried up, then in my 60’s running out of money, I had to declare I was permanently retired in order to access an Allocated Pension from my Super fund.

I married late in life, my husband’s super was low, but he had access to things I didn’t, such as salary sacrifice and earned more. So we lived on my wage and put as much as possible into his Super. So, for me with no employment breaks for children, it was a combination of lower pay, no or lower access to Super and added expense in the early years, contributing to the spouse’s Super, and paid employment drying up after 55yrs.

We can’t change what happened in the 1970’s (but I still say the Qld Govt should reimburse their difference between female and male employer Super contributions), but the best response is to re-invigorate employment for 50-70yr olds, when one can put more into Super, rather than have to access it early. As for paternity payments, if you are unemployed, then it is the Govt who would have to contribute, or employers would exercise caution employing young females. Work is changing, less people are in traditional full time wages work and more in the gig economy, small business, independent contractor etc where no one pays your employer contribution. A complex issue with no simple answer.


#6

…best critical analysis I’ve heard yet !

I find it difficult to see super as part of the answer at all - except most of the ‘systems’ we have to deal with complex situations are a one size fits all with a million exceptions because it doesn’t fit anyone. Taxation, Healthcare to name but two.

Long term couples successful in their relationship ‘might’ be better off if they pool their resources (noting that not all couples do this), but apparently that’s less than half of relationships these days and the fallout from the resulting legal issues can change the whole game, for one or both.

(Noting that this topic appears to be about a difference in treatment of genetic females when compared to genetic males, not a ‘gender gap’, which these days seems to have a multidimensional context, for some at least …)


#7

Thanks @zackarii for expressing such a complex situation so directly.

One comment resonates more than all the others for our household.

It is not only access to or availability of employment, it is also about the nature of the employment, conditions and location.

Our options have also been reduced by our choice of retirement location. No more city living and no more working away.

The only consolation is that there are a great many more than us who have very little extra for retirement.


#8

Has anyone been able to locate the full report used as the basis for the comments in the original post? If so, please provide a link.

I have a healthy scepticism of headline comments drawn from research associated with universities, particularly when an article does not provide information where to find full details of the research and associated findings. As an example, articles included on the Monash website, based on the research, state that people aged from 44 to 46 form a “late career” category. It would be good to know if the research included older people and, if so, why the related findings were not included in those articles.

There are many reasons for size of the gender gap in superannuation savings. Other reasons include women being more likely to choose safer (with lower average returns) investment options, often when assets are split on separation the woman might get the house and the man the majority of super investments and tax incentives relating to personal contribution deductions for a couple might favour payments being made to the account of the higher income earner , which is more often the male.

It is important that women, and men, become more active in how much and how they invest in super, rather than hoping that someone else (the employer or Government) will in the future make contributions that don’t currently apply.


#9

It has not been published as an open public document. The abstract provides a link which will take you to another web page and the order options.

https://research.monash.edu/en/publications/why-women-have-lower-retirement-savings-the-australian-case

Not cheap!
43 USD for 24 hrs or 211 USD for 30 days.
Andy must be well renumerated or have a free copy?

P.S. (edit note)
See link to open copy accessible from an alternate source.


#10

Thanks Mark,

I might skip getting the report and instead contribute $310 (USD 211) to my wife’s super account.


#11

Try this link for the full pdf of the article:

There is a “Download full-text PDF” button to download the article in it’s pdf form or you can scroll down to read it online.


#12

The major factor for the gender gap is when women take time out of the work force to raise children , in the vast majority of cases they have a partner (generally male) who continues to work and earn Super . Perhaps the research should consider the combined family super balance as even if there is a relationship breakup the Super balances are usually divided .


#13

Another voluntary option could be that the working partner’s (compulsory and voluntary) super contributions is split if requested between the working partner and the stay at home partner (half goes to each). This would ensure continuity of super contributions and associated ‘benefits’, whilst both parties are treated equally.

It would disadvantage single parents, but would solve the problem for the reminder of the population.

It also gives individuals the decision where to place the super contributions generated while one partner decides to stay at home and look after children. A coupe could decide to maintain the status quo or split contributions.

It should also be noted that there is also the option to do spousal contributions…and may be an option to those who make voluntary contributions above the compulsory contributions. It is possibly that many couples don’t realise that this exists or there may be financial benefits redirecting the voluntary contributions to the non-working partner. One should seek independent financial advice if this is something they wish to pursue.


#14

Yes, it is not a one size fits all situation.
To ensure a just outcome needs to consider there are differing circumstances for all individuals. Single no family, single parents, couples (more than one option there) and post marriage or widow/er.

There are debatable inconsistencies in how tax is assessed, benefits determined and super deducted.

For lower income individuals or families the level of disadvantage with super is typically greatest. That is irrespective of gender or other circumstance. It is a demographic with a majority of women. Outcomes are worse with unpaid time off work. Maternity leave is the big one for women. There is also time off with injury. Generally, although there may be some award or fair work exceptions Workers Compensation payments exclude payment of super. In which instance everyone looses.

For couples the system treats super independently. In difference to that government benefits are determined on combined circumstances, whether through tax benefits or Centrelink assessments.

Which should it be?

One standout example might be how the system taxes a couple. Consider the tax and entitlements of a working couple on similar pay rates with one working full time and the other part time/casual for a combined total of 55hours per week. It is likely a better financial outcome (lower total taxes) than just one working 55hours with a higher tax bracket, and possibly less super depending on the type of employment.

Looking at improving the equity of super for couples opens up the debate on taxing couples by equally splitting the assessable income.

It does little for improving the super outcomes of anyone on lower incomes or while on unpaid leave.

It seems unlikely any government will elect to fund additional super for unpaid leave or allow increased super through splitting and foregoing tax revenues?


#15

Moving away from the basic formula that your super is a fixed fraction of your money earned to favour women on maternity leave would broadly reduce the level of inequality between men and women. If society as a whole decides this is a good thing it brings up other problems.

  • If this is the desire of the whole society why should employers be the ones to pay for it?
  • What about those who earn less during their working life for some other reason? Is bearing and raising children in a special category? If so why?
  • If we do agree that some subsidy is a good thing for bearing and raising is this the most efficient way to do it?
  • It is fair that this scheme discriminates against childless women?
  • Which is better, discriminating in favour of women by increasing their super in a way not related to the value of their work done or removing existing discrimination against them that is related to the value of their work done (eg women getting paid less in the same job as men)?