OPINION | A well-funded television advertising campaign regularly asks us to “compare the pair” when it comes to the performance of different types of superannuation funds, but the starkest and most concerning gap in peoples’ retirement savings is between women and men.
Across every age group, the gap between a man’s and a woman’s average superannuation balance is significant and it creates a wealth deficit by the time retirement arrives, leaving many women poorer than men.
There are many factors that contribute to this financial inequity but in large part it is because many women have interrupted work patterns.
Just to put the issue in perspective:
Women aged between 35 and 40 have a median balance that is $20,000 less than a comparable male in that cohort.
The gap grows as they get older.
Women aged between 45 and 54 have a median super balance of $74,000. That is $44,000 less than men in the same age bracket.
By the time retirement begins to loom, the median nest egg for women who are aged 55 to 64 is $96,000, which is close to $50,000 less than for their male counterparts.
Among women, 97 per cent of those with a super account accrue a balance of less than $500,000 over their working lives and into retirement.
Reforms add flexibility, will aid women
This is a major structural challenge and one with implications for policymakers because, as recent Census figures show, Australian women are living longer than men.
The start of the new financial year, on July 1, 2017, marked the beginning of the most comprehensive package of superannuation taxation reforms in a decade.
At the heart of our superannuation reforms is flexibility for millions of Australians, many of whom are women, to provide them with more opportunities to make the superannuation system work harder for them.
Consider the working patterns of Australian women; 44 per cent of all employed women – compared with just 15 per cent of men – worked part time in 2015-16. This is a figure that increases to 62 per cent for women who have a child under the age of 5.
Take another example: more than two-thirds of primary carers are women and, on average, 55-years-old. Just 56 per cent of all carers, male or female, participate in the workforce, compared with 80 per cent of non-carers.
This is one reason we have made it easier for all people, including women in these circumstances, to catch up on their superannuation savings when they return to work, through our catch-up concessional contribution changes. From July 1, 2018, this measure will be available to anyone below the age of 65 with a balance less than $500,000 who doesn’t fully use their concessional cap of $25,000.
We have also levelled the playing field so that all people can take full advantage of their concessional contribution caps, no matter how they are employed. Many men and women who are small-business owners and who work part time in a salaried job can’t do this. Indeed, before our reforms, a person employed by a small business that doesn’t offer salary-sacrificing also missed out. We have changed this. From July 1 this year, we have given everyone the same opportunity to save. Whether you are employed by a big business or a small one, you won’t be disadvantaged. This is expected to benefit about 800,000 working Australians in 2017-18.
Help for couples, too
We also want to make it easier for couples to help their low income-earning partner save for retirement, through our spouse tax offset changes. We are enabling more people to access the offset by extending eligibility to those whose recipient spouses earn up to $40,000. It is estimated that this will help an additional 5000 families.
In addition, the Low Income Superannuation Tax Offset will boost the superannuation savings of about 3.1 million low income earners, including 1.9 million Australian women. As a result, low income earners, who are disproportionately women, will benefit from a refund into their superannuation account of the tax paid on their concessional superannuation contributions, up to a cap of $500.
We can’t close the retirement savings gap overnight, but it is an important goal to work towards because having a comfortable retirement shouldn’t be the domain of just one half of society.
The Turnbull Government is demonstrating, through action, our commitment to helping more Australians, particularly Australian women, secure their financial future.
The Hon Kelly O’Dwyer MP is Minister for Revenue and Financial Services.