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Uncovering the gender superannuation gap in Australia

Pascale Helyar-MorayPascale Helyar-MorayPascale Helyar-Moray OAMMay 10, 2023
woman staying home to care for child and performing unpaid care workwoman staying home to care for child and performing unpaid care work

In Australia, there is a significant gender superannuation gap. Women are retiring with less superannuation than men and often face financial insecurity in their later years due to this problem. This gap is caused by a few key factors, such as unequal pay between genders, time taken out of the workforce for parental leave, and different life expectancies that cause women to live longer than men. Let's delve deeper into why this gap exists and how it affects Australians.

Gender pay gap

The gender pay gap is a measure of how we value the contribution of both men and women in the workforce. One of the major problems contributing to the gender superannuation gap is that women continue to earn less than men and are more likely to be engaged in casual and part-time work. Because the current superannuation system is linked to paid work, it overwhelmingly disadvantages women who are more likely to move in and out of paid work to care for family members.

According to the Workplace Gender Equality Agency (WGEA), Australia's national gender pay gap is 13.3 per cent. So, for every dollar on average men earned, women earned 87 cents. That's $253.50 less than men each week. Over one year, that adds up to $13,182. This discrepancy creates a disparity in retirement savings when both genders come closer to retirement age because men have had more money going towards their superannuation contributions each year compared to their female counterparts.

Time off for parental leave

Women are all too often falling behind their male counterparts in terms of lifetime superannuation as they are often the ones taking time off work for parental leave. Research from the Australian Institute of Family Studies (AIFS) states that 43% of mothers return part-time or casually after taking parental leave, while only 4% of fathers do so. When mothers take extended periods away from work, they miss out on important salary increases that would have contributed more towards their superannuation balance over time. As such, they accumulate far less superannuation over their lifetime when compared to fathers who are able to continue working full-time without interruption during those times when family commitments become priority number one.

The types of work women do, compared to men

Australian women face a significant superannuation gap, where the median balance for men aged 60-64 is $204,107 compared to women of the same age who have only saved $146,900 - almost one-third less. This gender disparity in savings has been linked largely to part-time and casual work that many female employees engage in, as well as longer periods out of paid employment. The 2021 KPMG report showed this difference ranges between 22% and 35% depending on the sector, with pre-retirement ages displaying a vast 33% rift.

Different life expectancy rates

Finally, another key factor contributing to the gender superannuation gap has been linked back to differences in life expectancy rates between men and women. On average, women tend to live to an average age of 85, which is four years more than men, according to data from The Australian Bureau of Statistics (ABS). Since women generally have fewer retirement savings due to unequal pay and time out of the paid workforce, these extra four years mean more time living on limited monies available in their superannuation accounts. In comparison, males typically retire with higher balances at a younger age due to fewer withdrawal periods throughout life.

How COVID-19 made the gap even worse for women

According to the Australian Bureau of Statistics (ABS), the gender gap was made worse for many Australians by the COVID-19 crisis provision that allowed people to make two early withdrawals of up to $10,000 each time from their super. Australian Prudential Regulation Authority (APRA) also states that nearly three million people have taken a total of $36 billion out of their super accounts. This impacts women more because they are more likely to have spent it on food, clothing and utility bills. It's likely to exacerbate the problem where women retire with an average of $150,000 in super compared with $270,000 for men. Yet, women live longer, according to the 2017 ASFA Report titled ‘Superannuation account balances by age and gender’.

How Grow My Money helps close the gender superannuation gap

Grow My Money provides a simple way to help close the gender superannuation gap via its superannuation cashback shopping platform. Customers are rewarded with super contributions just by making everyday purchases via the Grow My Money website, cashback app or by shopping in-store at participating retailers. For instance, they can earn up to 20% of the purchase price at NordVPN, up to 5% when buying clothes at Forcast, and up to 1.1% from Appliances Online. It’s free to join, and there are no ongoing charges. Every time you shop, your superannuation rewards can be seen on your Grow My Money dashboard for easy tracking, which, once verified and paid to us by the retailer, are deposited in your super account. Grow My Money pays into any super account in Australia, including Self Managed Super Funds. Shopping with Grow My Money helps you build up your super balance, and the regular deposits also keep the super fund active when the woman – or man - is not working and contributing via employer contributions to their super. The importance of keeping your super account active cannot be underestimated; an active super account means super insurance also remains intact.

The gender superannuation gap presents significant issues for many Australian women approaching retirement age as they face financial insecurity due to a lack of adequate retirement savings due to wage and parental leave inequality and differing gender life expectancies. To address this issue, we need policies that ensure equal pay regardless of gender and incentives that encourage employers to give equal benefits for parental or carers leave. Only then can we begin closing this vast disparity in retirement savings between male and female Australians alike so everyone can enjoy greater financial security later in life. So, until that disparity is resolved, take the first step towards securing your financial future in retirement and sign up for Grow My Money today.