Women and the Superannuation Gap

Superannuation is one of the most significant financial investments you’ll make throughout your lifetime. Your super fund is the money set aside for when you retire. In Australia, it’s compulsory for employers to pay a percentage of their workers' salaries towards their retirement fund. However, for Australian women retiring, there’s often a significant gap in their super funds compared to their male counterparts. 

What is the superannuation gap between men and women in Australia? 

Even though women statistically live longer than men, their superannuation outcomes often fall short of men's. According to research by the Association of Superannuation Funds of Australia, the superannuation gap between men and women in Australia is around 25 per cent. What does this look like on paper? In 2019, the average super for males aged 60 to 64 was around $178,800, whereas females of the same age were around $137,050 - a gap of 23.4 per cent. Other data on the superannuation gap between men and women shows that in Australia, superannuation tax concessions favour men over women, with women only receiving 42 per cent of total concessional tax benefits from super contributions and 39 per cent of total concessional tax benefits from superannuation earnings. 

Why is there such a significant gap between male and female super funds?

Unfortunately, the significant gap between male and female super funds isn’t entirely straightforward. The gap is present mainly due to four contributing factors.  

The gender pay gap 

Firstly, the gender pay gap plays a significant part in the discrepancies between men’s and women’s super funds. Less annual pay equates to less super contributed by employers. 

Parental and primary carers leave  

Parental and primary carer leave policies are designed to support and protect working parents who are raising young children. Statistics show that women account for 88 per cent of all primary carer leave utilised, while men account for the remaining 12 per cent. This time out of the workforce often pauses superannuation payments (depending on the arrangement with your employer). 

More time out of the workforce 

Additionally, women are more likely than men to take extra time out of the workforce to raise their children and care for aging relatives. This often involves doing large portions of unpaid jobs around the home (such as housework).  

Less hours means less super 

All of the above factors tie into the last reason - more women work in part-time or casual roles than men. These roles with reduced hours are often to cater for things like school pick up/drop off, staying at home so they don’t have to send the kids to daycare, etc. The reduction in hours therefore means a reduction in super pay. 

How to combat the superannuation gender gap

There are a few things that can be done to assist with combatting the gender superannuation gap. These include: 

Super co-contributions

Super co-contributions are a government initiative created to support low to middle-income earners. For anyone in this category who makes personal, non-concessional payments after tax, the government may pay up to $500. This payment happens at the end of the financial year and is finalised during tax returns. 

Spouse contributions

Spousal contributions are another way to combat the superannuation gender gap. These contributions are another government initiative where a spouse can assist with adding money to your super. There are a couple of ways to go about this. Firstly, your spouse may be able to split contributions they’ve already made to their own super by rolling them over to yours super – known as a contributions-splitting super benefit. Secondly, your spouse can make direct contributions to your super, which are treated as non-concessional contributions and may entitle them to a tax offset.

Consolidate your super accounts

If you have multiple superannuation accounts, consolidating them means you’re only paying one set of fees and the larger sum of money in one account will benefit more from compounding interest. You can check if you have multiple super funds through the ATO online. 

Ask for a pay rise

This may not be relevant to everyone, but asking for a pay rise is one way to get more money into your super. Research a reasonable salary for your industry, role and experience, and create a case based on your performance and achievements. If you never ask, you’ll never know! 

Make voluntary contributions if possible

If possible, make small voluntary contributions to your super fund. It doesn’t have to be hundreds - even $20 a week can go a long way when it comes to compounding interest. Other things to consider include any cash bonuses you might get, tax returns or even inheritance. 

Consider investment options 

Within your super fund, there are investment options you can choose. Generally, your super fund will invest in a mixture of assets, but you can be more selective about these. It’s always best to talk to a financial advisor about your options and which one will best suit your financial needs. For example, a high-risk, high-reward option may be worth looking into. 

Invest elsewhere for a passive income

Alternatively, investing elsewhere to generate a passive income is a great way to grow your wealth. Again, each investment style comes with its own risks and rewards, so it’s best to talk to your financial advisor to find a strategy that works for you.

What is the government doing?

Thankfully, the government are slowly beginning to implement measures to close the superannuation gap between men and women. In March, the federal government revealed that it would pay superannuation on government-funded parental leave starting in July of next year. According to the Association of Superannuation Funds of Australia (AFSA), it's expected to add an extra $5100 to the super balances of mothers.

How can the team at Inovayt help me grow my super?

At Inovayt, we know that setting up and managing your superannuation fund is crucial to achieving the retirement you’ve dreamed of. However, we’re well-versed in the complexities of superannuation - especially for women who may have an extended period out of the workplace. If you need help managing your super, get in touch with the team today.