Women retire on average with about 30 per cent less money than their male peers; many older women are facing financial distress and poverty; and this situation is not going to improve unless specific measures are taken to address it, argue Cate Wood and Robbie Campo – who have more than 40 years of profit-to-member industry experience between them – speaking on Conexus Financial podcast the Future of Super.
Cate Wood is the former national chair of advocacy group Women in Super, and past president of the Australian Institute of Superannuation Trustees, among many other high-level industry posts. Robbie Campo is the group executive of brand, advocacy and product at Cbus Super, and is the chair of Women in Super’s policy committee.
Campo said the fastest group of people joining homeless queues are retired single women who are renters. “The difference in outcomes that are being achieved by women compared to men are significant, they’re systemic, so they’re not caused by the choices of individual women, it’s all about the way the whole system operates,” Campo said.
There are three main drivers of the gender retirement gap, Campo said. One is the gender pay gap. Another is the impact of women continuing to bear primary responsibility for unpaid caring roles, such as caring for children or sick parents, which interrupts their careers and causes them to miss out on the full benefit of compounding interest.
But a third is system settings that are making the problem worse than it already is, Campo said. While this is unfortunate, these problems are the most amenable of the three drivers to being reformed and fixed, she said.
Some progress has been made, such as the changes around unfavourable outcomes after divorce, Campo said. With superannuation often the only asset available for divorcing couples, it has historically been a challenge to split superannuation.
Sensible, logical changes have been made recently to this, she said, with “changes to make it administratively much easier for women to be able to get access to information about their male partners’ superannuation – because typically it’s the male partner who’s had the opportunity to accumulate more – and then to provide a smoother…administrative process for those assets to be separated.”
Wood pointed out Australia’s superannuation system has made things better for everyone, recounting that more than 20 years ago when she was a union official, only about 30 per cent of the workforce overall had any superannuation, and most of these people were men in the public sector.
But some of the sector’s current settings are stacked against women, Wood said. With compound interest becoming more beneficial the longer an investment is in place, this also disadvantages women whose careers are interrupted by caring for children.
“Their income is not going in early and compounding interest,” Wood said. “Women are often trying to save late in life, where the money is not going to work for them.”
Wood noted the paid parental leave scheme does not have super guaranteed payments associated with it, which contributes to the retirement gap for women. In Nordic countries, parental leave is shared between men and women, and has full pension payments associated with it all the way through, she said.
But the “big system issue” is regarding tax, Wood said. Super offers a tax advantage but it is a flat tax, not a progressive tax, making it less beneficial for low-income earners, she said.
“[Women are] disadvantaged because the tax is preferential to high income earners, two thirds of whom are men,” Wood said. “So, two thirds of all the tax benefits in the super system go to men.”
Those earning $18,000 a year aren’t required to pay tax on their income, but they don’t get a tax benefit for saving for super.
“At the moment, you get this low income, super tax offset, which simply repays you the tax – the 15 per cent – that you have to pay on your super, because it’s completely unfair,” Wood said. “What would be fair would be that you got an actual contribution into your account equivalent to 15 per cent, so you get a kick the same as some high-income earners.”