Why women accumulate less superannuation than men

The gender gap between men’s and women’s superannuation accumulation has once again come to the fore with the federal government’s review of the retirement income system being urged by a group of 100 high-powered business women and men to examine the specific needs of women. Sandra Buckley, the CEO of Women in Super, says men always have more superannuation than women, whereas Australian Institute of Superannuation Trustees CEO, Eva Scheerlinck, notes that most women have broken work patterns and are more likely to work part-time. From The New Daily:

“There have been at least five reviews into or including superannuation [Cooper, Henry, Financial System Inquiry, Productivity Commission, Hayne Royal Commission] in the past decade and the issue of women’s retirement outcomes was not explicitly addressed, so we continue to have the situation whereby women are retiring with less than half the superannuation of men,” Ms Buckley said…

Currently, 23 per cent of women retire with no super, and one in three women has no super account, WIS found.

“Men always have more super than women,” Ms Buckley said.

“In the early years of careers until the ages of 30-34 there is a less than 10 per cent difference. However, the gap steadily grows to 33 per cent at 55-59 before closing at 79 per cent at 60-64.”

The inherent bias against women’s superannuation stems from the inequitable way that concessions are distributed, which disadvantages lower paid workers irrespective of gender.

Under current arrangements, superannuation contributions/earnings are taxed at a flat rate of 15%. Accordingly, those on lower incomes receive minimal concessions (or are penalised), whereas those on higher incomes receive the biggest tax concessions:

Division 293 remedies the situation for those very high income earners above $250,000. But even then, the lion’s share of superannuation concessions still flow to the highest income earners, whereas the lower income earners continue to be disadvantaged by the system, as shown in the next chart from the Grattan Institute:

Since women typically earn less then men over their working lives – because they tend to work in lower paid professions (e.g. nursing and teaching), work part-time, or take time off from working to raise children – they obviously accumulate much lower superannuation balances.

The first best solution to this problem is to reform the superannuation system to make concessions more equitable and sustainable.

In particular, the 15% flat tax on contributions/earnings should be replaced with a flat-rate refundable tax offset (e.g. 15%):

This way, everyone that contributes to superannuation would receive the same concession, the system would be made progressive, and lower income earners – be they male or female – would get a better deal.

The 30-year old rule that stops earnings under $450 from an employer in a month from attracting superannuation should also be removed.

As an aside, the growing concerns over the disparity between male/female superannuation and earnings is largely a non-issue. We are family units whereby husbands/wives pool their financial resources – both incomes and savings – and share workloads, be it paid or domestic.

Moreover, when couples divorce, financial resources are split-up and distributed among the spouses, including superannuation savings.

Instead of fighting manufactured gender wars, policy makers should focus on eliminating poverty, irrespective of gender. Making superannuation concessions more equitable is a good start.

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  1. PlanetraderMEMBER

    Leith, agree and you have made a very key point it seems the masses do not understand: I am pretty sure that contribution splitting allows you to split your concessional (before-tax) contributions from your accumulation super account with your spouse.
    So for a two-income family, is there any excuse as to why such a high proportion of women have lower super?

    • Even StevenMEMBER

      In theory, there is nothing that prevents a dual income family from equalising superannuation balances, but it doesn’t happen automatically. It requires action. And for the vast majority of people it makes no difference anyway. So they don’t. It’s no conspiracy.

      The only real benefit would be if your super account is likely to exceed $1.6m at the point you commence drawing a pension or you have a younger spouse and are trying to qualify the older person for Centrelink benefits. Both very specific cases and unlikely to be of relevance to the average person.

  2. Your policy ideas are good, although it might be simpler if superannuation were taxed progressively every year on the basis of how much has been accumulated. You are right that couples share their superannuation. The court may split the superannuation on divorce, but what about the situation where the divorcing parties are younger, the wife is caring for small children, and there just isn’t that much superannuation or equity in the house, if they have one? Her ability to earn money (and superannuation) is severely reduced by her caring responsibilities.

    • The obvious solution, not that anyone will implement it, is to completely scrap the privatised pension system that will always favour the wealthy over the poor, remove all concessions for super and reimplement a proper government pension system. Anything other than this will always result in a system that provides tax advantaged savings for the wealthy while median wage earners never accumulate enough to retire on comfortably, either male or female.

  3. Ahhh the gender wars. Can’t wait to tell my grandkids about it in 40 years.

    Hey grandad did you fight in any wars?

    Yeah son, it was a horrific times back then.

    Did you fight in WW2 or Vietnam?

    Nah son, much worse, I fought in the gender and culture wars of the twenty teens, where every individual was at war with every other individual. Where everyone was offended and outraged by everything and the world descended into madness. Where a tidal wave of woke supremacists tried to remake the world order in their own twisted ideology. But it’s too painful to really talk about it. Horrific times.

  4. plebngineerMEMBER

    I’m pretty much partnered with a dud. She went OS for a few years to work and travel, came back did her own business (that failed, she describes it as a success) and didn’t pay herself a cent in Super. Meanwhile, I’ve been churning away…