“Australian women are currently retiring with around half the superannuation savings of men, with a gap of around 47% for the year 2013/2014 according to the most recent ABS statistics,” said David Whiteley, Chief Executive of Industry Super Australia (ISA).
The figures, which ISA referred to as “alarming”, were part of evidence to the Senate Economics References Committee, which was holding a public hearing as part of the inquiry into economic security for women in retirement.
“The gender pay gap, sitting at 19%, is a significant problem. Women’s lower earnings and disrupted work patterns compound into a much larger gap of 47% in retirement savings,” said Mr Whiteley.
The ABS statistics show the gender gap for retirement savings grew from 39% in 2011/12 to 47% in 2013/14. The median super balance for males in the 55-64 age range grew from $107,000 to $150,000, while over the same period and ages female median super balances only increased from $65,000 to $80,000.
“While it’s good to see that the value of super balances for older men and women have grown quite significantly over the last two years, it’s very concerning that year after year Australian women are still retiring with nearly half the savings of their male counterparts,” said Australian Institute of Superannuation Trustees (AIST) CEO, Tom Garcia.
Not-for-profit Women in Super also appeared before the committee. In a statement the organisation’s CEO, Cate Wood, said a “range of policy measures” are needed to address the superannuation gender gap.
“While there seems to be a growing consensus of the need to reform the super tax concessions, the savings made must be redirected towards improving the retirement outcome for women if we want to make the system more equitable,” Ms Wood said.
“There are too many holes in the current retirement savings system that women fall through.”
“This is a complex problem of structural impediments in the super system and elsewhere that will require a collaborative and holistic approach to fix.”
Industry Super Australia agrees that changes to the super system are needed to reduce the gender gap.
“Without substantial structural reform in a number of areas, our retirement income system will continue to fail future generations of women. In a relatively wealthy country like Australia, this is unacceptable,” Mr Whiteley said.
He said the government should be congratulated for considering “re-balancing” the superannuation tax concessions.
“This would be a significant step in increasing the super savings of millions of Australian women.”
In particular ISA supports reviewing the recent changes to the age pension, accelerating increases to the superannuation guarantee rate, keeping the Low Income Superannuation Contribution (LISC) past the current end date, better targeting of the super tax concessions and paying super on parental leave.
The Committee was told “the existing policy settings are not effective” at reducing the superannuation gender gap. According to an ISA document the removal of the LISC combined with freezing SG increases “will reduce the super incomes of women by 10%.”
ISA also recently proposed a $5,000 ‘super seed’ government contribution for low income earners.
“There is no question women are severely disadvantaged by the current structure of super tax concessions, the bulk of which flow to high income earners who are predominantly male. The lowest paid, mainly women, receive no tax concessions and effectively suffer a 14% reduction in their superannuation income due to the perverse fact that they pay more tax on super than on their income,” said Mr Whiteley.
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