“Australia’s super system is one of the world’s best, but gaps remain that overwhelmingly disadvantage women and those earning lower wages,” Debby Blakey, CEO, HESTA told AsianInvestor.
The industry super fund, which invests over A$70 billion on behalf of 970,000 members said tracking and closing gender gaps remains its top priority.
Around 80% of HESTA members are women working in health and community services, with many often working in lower paid part-time or casual roles, said Blakey.
As a result, the majority of the fund’s members would be less likely to be able to save outside their super and would be more likely to have lower account balances when they retire compared with their male counterparts.
HESTA’s pre-budget submission focuses on key measures that address gender inequities in superannuation and improve financial security for women in retirement.
“Women make an enormous economic and social contribution through the unpaid caring roles they undertake. They shouldn’t be financially penalised with inadequate super savings and a greater vulnerability to poverty as they age,” said Blakey.
The May 2023 Federal Budget is “a key opportunity to make real progress on boosting women’s financial security in retirement”, according to Blakey.
HESTA modelling revealed that addressing super inequities could deliver a more than 11% boost to its members' account balances at retirement.
“We want the government to prioritise paying super on the Parental Leave Pay scheme as parental leave is the only widely accessed form of paid leave that does not include corresponding super contributions. This disproportionately impacts women as we know women are currently much more likely to be the ones taking parental leave,” she said.
The modelling indicated that paying super on the Commonwealth Parental Leave Pay scheme and better targeting tax concessions could significantly improve the retirement balances of critical health and community services professionals.
“It will be interesting to see what the government chooses to prioritise because there’s obviously a huge amount to do. But there seems to be a very strong appetite to address inequity in our super system and I would love to see us capitalise while there is that strong appetite,” said Blakey.
“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 our members.”
As Australians brace for a possible recession and climbing cost of living pressures, new research by Australian Seniors and consumer research group CoreData, paints a grim picture of how women over 50 could be disadvantaged by an uneven playing field when it comes to super savings.
The Super Savvy Report 2023, which surveyed more than 5,000 Australians over 50, found that a looming recession weighs more heavily on women—with over four in 10 women having strong concerns about the rising cost of living in Australia as opposed to just over a third of men.
The Australian retirement system is built on three pillars where there are voluntary savings, involuntary savings (which superannuation plays a large role due to the mandatory employer contributions) and social security payments (age pension) according to Dawn Thomas, senior financial adviser at The Wealth Designers and spokesperson for the report.
The Wealth Designers
“Superannuation is the main vehicle for an independent retirement. However, this system can be unfair to women as things like career breaks and the age gap, impact growth of superannuation. Women on average have half the superannuation balance of men at retirement,” Thomas told AsianInvestor.
An individual’s super balance is affected by many things - career breaks, wages, divorce, caring occupations - which in turn has a devastating impact on women’s economic security.
“It has been described as a wicked problem due to the negative compounding impact that this has on women’s retirement outcomes. This super gap has existed for a while due to the assumption that traditional family units of the main income earner and the main carer, stay together at retirement. Men enjoy a fatherhood premium in their super balance while women tend to conversely experience a motherhood gap,” Thomas said.
The choices at present for women facing retirement are being financially independent, being partnered to achieve financial security or facing the real prospect of homelessness, she said.
“While for the most part, many Australians are disengaged with their super accounts, unfortunately, women over 50 can’t afford to not be engaged with their super. Being a passive financial participant is not a luxury women have and, even more so with the recession looming, women should be taking more control,” she said.