What it will take to close the super gap between men and women

There’s a lot of talk about in how to close the super gap between men and women, with women often retiring with far less than men.

 

 

The main drivers of this are due to women both earning less and  taking time out of the workforce to care for children and other family members.

In a previous column, I discussed steps women and their partners can take to close this gap.

A new report from Women in Super and research firm Rice Warner reinforces the risks that the gender gap poses for women and offers data on the roots of the problem.

Previous research showed that because women have less in super and rely more heavily on the age pension, they are more likely than men to face financial insecurity and poverty in retirement.

As you can see from the Rice Warner data in the chart below, the super gap starts to widen when women are in their 30s, suggesting that taking time out of the workforce to rear children diminishes income and super contributions.

The research also demonstrates that women start out their careers with pay that is close to their male counterparts, only to see a gap emerge as women enter their 20s and 30s. The source of this divergence is not clear, but one likely cause is that women are more likely to leave work to take care of children or family members, missing out on years in the workforce when promotions and pay raises are most likely.

Investment research shows that men tend to invest more aggressively than women, but Rice Warner said this difference did not contribute significantly to the super gap.

The positive news is that women are taking action to close the gap. They contribute more to super, especially as they approach retirement, which boosts their balances at a crucial stage.

Many women don’t earn enough to make extra contributions, however, and those who do likely can’t compensate enough for years of reduced earnings and super guarantee payments. The roots of the super pay gap are many — gender inequality, the challenges and costs of child care and super policy. Fixing the problem will require changes on all those fronts.

 

Written by Robin Bowerman
Head of Corporate Affairs at Vanguard.
21 May 2019
vanguardinvestments.com.au

 

  • SMSFs attract younger members

    Given that self-managed super funds (SMSFs) hold more than half of the retirement dollars in super, it is easy to assume that self-managed super is dominated by older members. Not so.

  • Heed restrictions on downsizer contributions

    Downsizer contributions can be a valuable strategy for members who are retired or have reached their contributions caps to tip further funds into super, but advisers need to be aware of the restrictions around which property sales are eligible, according to a technical services expert.

  • Access to more resources and tools than most websites.

    We provide 24/7 access to all these extra tools and resources to help you build on what we offer concerning your tax and other financial affairs. *

  • Valuations key to avoiding NALI restrictions

    SMSF trustees may find properties within their fund caught under changes to non-arm’s length income rules if the property is involved in a related-party transaction and is not professionally valued, according to a leading SMSF law firm.

IT Financial Services, ABN 48 097 884 976, is an Authorised Representative of Apogee Financial Planning. Apogee Financial Planning Limited ABN 28 056 426 932 is an Australian Financial Services Licensee and has its registered office at 105 - 153 Miller Street North Sydney NSW 2060. A member of the National group of companies.