Advocacy group Women in Super estimates that women would need a super guarantee of as much as 19 per cent to make up for savings lost due to reduced work time from having children.
The savings of working women, therefore, especially those on lower incomes, will be greatly affected if the next increase to the super guarantee – a climb from 9.5 per cent to 12 per cent – is scuttled, Women in Super executive officer Sandra Buckley says.
This rise is scheduled to happen gradually and be completed in 2025; however, the Grattan Institute recently called for the SG to remain unchanged, suggesting that proposals to help close the gender gap focus too much on super.
In response, Women in Super has used Rice Warner modelling based on industry averages for age, gender, income and super balance to illustrate how a lower SG might affect women in various age groups.
For example, a 25-year-old woman earning $35,000 a year stands to lose 15 per cent from her retirement savings if the government abandons the legislated increase, Women in Super states.
Meanwhile, the advocacy group reports that a 45-year-old woman could expect to see an 11 per cent, or $18,000, reduction in her retirement balance and for a 35-year-old couple, the loss would be $46,000 or 15.5 per cent. Taking time off to have two children and then working part time for nine years would reduce woman’s retirement savings by a further $35,000, the data shows.
“The gender super gap occurs due to a number of complex, interrelated factors, which include the gender pay gap, time away from the workforce for children and a number of years spent in part-time flexible roles,” Buckley says. “Our current super system is based on a full-time, well-paid job for life. But lifetime jobs are becoming increasingly rare. Growth in the casualised workforce continues leaving large numbers of casual and part-time workers outside the super system.
“We need to take a look at the retirement income system and overall situation faced by women – retiring with less than half the super of men and one-third retiring into poverty. [We must] implement policies that address all of these issues and ensure that women can also retire with adequate superannuation.”
Buckley adds that although the younger generation of workers will probably retire with more super than the current generation, the existing gender gap will remain due to these ongoing challenges.
Women in Super states that Grattan’s position risks leaving future generations of women in poverty come retirement, especially older, single, retired women.