Paying women extra super could dramatically improve retirement

With International Women’s Day arriving this week it is worth thinking of the many ways in which the Australian economy gives women a really raw deal.

Many female dominated sectors of the economy are relatively poorly paid which results in women typically earning about $25,000 less than men.

That means that for every $10 earned by a man, a woman was paid $7.72.

While that gender pay gap has been closing slowly, women are also more likely to have interrupted careers due to childbirth and child rearing and are also more likely to do more unpaid work at home.

Less money to cover a longer lifespan

All of this means that when to comes to retirement, women retire with an average 23% less superannuation which needs to cover women’s longer average lifespan of an extra four years.

Indeed, to overcome that superannuation gap, a woman would need to work for an extra 11 years before retiring.

Clearly this is a less than optimal situation which the Association of Super Funds of Australia (ASFA), estimates could be largely remedied by paying women a $5,000 baby bonus into their superannuation accounts plus paying super guarantee amounts during their parental leave.

ASFA senior policy adviser Helena Gibson said it was really important to support women who were taking time out of the workforce to care for a child.

“There is strong support among Australians for policy action,’’ said Ms Gibson.

“Results of a recent ASFA survey show that more than 80% of people agree that government should try to boost the super balances of women who take time out of the workforce to have children.”

HESTA wants less gender inequality in super

Industry fund HESTA has also backed the introduction of new policies to reduce gender inequality in superannuation.

HESTA also wants to see super guarantee paid on maternity leave and it is urging the government to introduce a “carer’s credit” on unpaid parental leave which would see the super balances of primary carers boosted while they are not earning income.

HESTA has also been lobbying the government to improve the affordability of childcare to help women return to the workforce.

Women’s workforce participation rate when the youngest child is 0-5 years is almost 28.2% below that of fathers, and 12.2% lower where the youngest child is 6-14 years.

Need for more reforms

“There have been some significant reforms such as abolishing the $450 wages threshold for superannuation and improved super splitting arrangements, however, more needs to be done to improve financial security for future generations of women,” HESTA chief executive officer Debby Blakey said.

“An incoming government needs to prioritise long-overdue superannuation equity measures and boost women’s workforce participation through improved access to affordable childcare. Addressing gender inequity will not only create a better society but has real economic benefits that can help investors like HESTA deliver better outcomes for their members.”