The superannuation system is failing women.
The Association of Superannuation Funds of Australia (ASFA) reports that on average men retire with an average of $113,660 more in super than women.
And this is despite an increased number of women in the workforce in recent decades.
Women are “generally worse off”, according to a three-year project funded by the Federal Government and led by the University of South Australia.
“Women are more likely to have fragmented work histories, earn less money than men, have fewer advancement opportunities and retain primary unpaid work and care-giving responsibilities, all of which contribute to a reduced capacity to accumulate assets over their life course.
“The gender pay gap, the high proportion of women who work part-time and their years spent out of paid work providing care, means that a new frontier of inequality has opened up in Australia – a gender gap in superannuation and other assets.”
The most recent breakdown of Australia’s $2.3 trillion superannuation industry is no surprise. Women who retired in 2016 averaged $120,000 less than men in their super accounts, but the gap is closing – slowly.
University of South Australia Centre for Workplace Excellence researcher Justine Irving says the super system is designed for and around men.
“It assumes an average of 40 years spent in continuous full-time employment to accumulate sufficient retirement funds,” she says.
“It doesn’t take into account that many women spend long periods out of the workforce while raising children.
“In addition to facing sexist and ageist attitudes in the workplace, older workers’ health, caregiving responsibilities and the type of work they do has a significant impact on whether they are able to retire with sufficient funds.”
Ms Irving rejected criticism that women did not understand the superannuation system, saying the imbalance was “simple economics”.
She told Nest Egg: “It’s the common expectation that women themselves resolve this and work this out, and that if there’s something that they can do, then that will reduce the gap and then increase their superannuation balances.
“When in actual fact it’s probably a bit unfair, because the issues are systemic and they’re not necessarily due to any fault of the women themselves.
“Obviously the less you earn the less you’re able to contribute to your retirement.
“It’s not the fault of a woman that she is unable to earn equal pay in some circumstances, or that she is more likely to engage in casual or part-time work.
“She’s not able to accumulate superannuation at all in some cases, so I guess it’s hard for individual women themselves to fix it without broader support.”
The chairman of Challenger Limited’s retirement income arm Jeremy Cooper told an audience in Sydney last week that there was a “serious question” about whether Australia’s superannuation system was “fit for purpose in retirement”.
The good news for women is that their super balances have jumped 53 per cent in the past two years. Men’s super balances have increased by 35 per cent.
ASFA chief executive Dr Martin Fahy says the disparity between the super balances of men and women is a key driver in social equality.
“While women can look forward to retiring with more superannuation than their mothers and grandmothers, the ongoing issue of broken employment patterns and a troubling, persistent gender pay gap means we cannot afford to be complacent,” he says.
Is there a solution to the imbalance?