In late 2018, Hydro Tasmania announced that they’ll start making super payments for employees on unpaid parental leave in addition to 12 weeks of paid parental leave offered to primary carers.
It’s encouraging to see organisations stepping up to tackle the super gender gap issue and creating a fair working environment for women.
Small changes like this can have a significant impact on women when they reach retirement, particularly if they take time off to have more than one child.
A 30-year-old woman earning an annual salary of $50,000 for example, can lose up to $77,000 in retirement savings from having six years out of the workforce and with more than 70% of childcare in Australia performed by women it’s something almost all will experience.
Imagine how it would feel to reach retirement age only to discover you have half the super balance of your male counterparts and are expected to live out what you thought would be your best days on a shoestring budget.
This is a reality for a lot of women of retirement age and with 40% living in poverty it seems that Australia may not be the lucky country for everyone.
By the Association of Superannuation Funds of Australia 2018 retirement standards a single female needs $545,000 to retire comfortably which is under $100,000 less than the $640,000 needed for a couple, leaving single women at a much greater risk of experiencing poverty, housing stress and homelessness in retirement.
The gap in retirement savings among women is the culmination of a lifetime of lower wages and the need for women to leave the paid workforce in order to have children and care for others.
Super is dependent on wages and with lower and less frequent contributions, women also miss out on experiencing the full benefits of compounding returns over their lifetime.
While Government action is required to address the issue on a wider scale, I would encourage businesses to take a progressive stance where they can and follow in the footsteps of organisations like Hydro Tasmania to make super fair for women.
National advocacy body, Women in Super, is leading the charge across Australia and has recommended a five-step plan to help close the gender super gap. This includes:
- Giving low income earners an annual contribution of $1,000 from age 25 for those with super balances under $100,000.
- Removing delays to increasing employer super contributions.
- Removing the rule that those earning less than $450 each month don’t receive super.
- Paying super on parental leave.
- Measuring and publishing the super gap each year to inform legislative decisions.
While the trend looks set to continue without timely change at a federal level, these steps provide a positive framework for achieving gender equality in the workplace and is something I hope will be carefully considered in the lead up to the next election.
The best thing for women to do in the meantime is to take stock of their current super situation and take steps to ensure their super is working for and not against them.
I would encourage women to check their super balances, review their account details and combine multiple super accounts as a first step.
Additionally, I would suggest exploring options such as making additional contributions, reviewing investment options and seeking financial advice to ensure they are in the best position when it comes to retirement.
We all have important women in our lives and I’m sure you’ll agree that we want to see them enjoy both equality in the workplace as well as a comfortable retirement.
It’s time we took the onus off women and put some pressure on our decision makers to make super fair for women, reduce poverty and ensure everyone has a chance to enjoy their best years.
Wayne Davy is CEO at Tasplan Super. We're a Tasmanian based profit-for-members super fund which has grown to be the state’s largest and only locally based super provider, with some $8 billion under management and 138,000 members which make up 50 per cent of the Tasmanian workforce.