Darker side to superannuation
AN unfortunate reality about Australia’s superannuation system is that the super savings of women typically lag way behind those of their male counterparts.
The seriousness of this imbalance would be difficult to over-emphasise.
Of course, the retirement savings of men are hardly a satisfactory target or yardstick for women because male super savings are also generally inadequate to achieve a satisfactory standard of living in retirement.
Why are the retirement savings of women in such a dire state?
Broadly, the answer lies in their lower average wages than men, their longer life expectancy than men and career breaks to raise families.
Another factor is that women often have difficulty rebuilding their finances after divorce for a range of reasons including because of their lower average earnings. As with anything to do with personal finances, much depends on individual circumstances.
Rice Warner Actuaries is among the superannuation specialists and commentators that have been hammering away at this issue of women’s super savings for some time.
At the recent annual conference of the Association of Superannuation Funds of Australia (ASFA), Rice Warner director Melissa Fuller presented a paper that ran through various measures that the firm believes would help even up the super imbalance.
Suggestions put forward by Fuller in her talk include: removing the $450 monthly income threshold for payment of SG contributions, which “discriminates” against women working part-time or on a casual basis; and allowing employers to voluntarily contribute a higher rate of SG for women given their greater longevity. (Employers cannot currently make higher SG contributions on gender grounds.)
Other suggested measures are: paying superannuation on the Government-sponsored maternity leave, which begins in January next year; encouraging employers to pay SG contributions during maternity leave; and providing Government co-contributions for super for contributions made by working spouses into the accounts of their non-working spouses.
The inadequacy of women’s super savings is truly a darker side of super.
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Robin Bowerman, Vanguard Investments Australia's Head of Retail, has more than two decades of experience in the finance industry as a writer, commentator and editor.