34% of Australian women over the age of 60 live in income poverty, compared to 27% of men.
On average, men are paid $83,050 a year and women receive $68,220. Australian Super data shows the impact of the gender pay gap on superannuation starts at an early age.
Currently, the average superannuation payout for women is a third of the payout for men- $37,000 compared with $110, 000.
Because the current superannuation system is linked to paid work, it overwhelmingly disadvantages women who are more likely to move in and out of paid work to care for family members. Women may also be in the types of jobs that pay less.
Women are more likely to have fragmented work patterns of paid work when women take primary responsibility for family care. For example, taking five years off work from age 29 to 34 is estimated to shave $100,000 off women’s average retirement savings.
Overwhelmingly, women take Commonwealth Parental Leave Pay- 99.5% compared to just 0.5% of men. Compounding the problem is that employers do not need to pay superannuation on parental leave, yet workers are paid superannuation on most other types of leave.
All of this can be negated if you are part of a couple, as household income and expenses are shared. Additionally, as part of a partnership, there are a couple of strategies that can be put in place to combat the superannuation gap for women:
- Spouse Contribution Splitting- up to 85% of the concessional contributions can be rolled to your spouse’s superannuation fund each year
- Tax Offset- given for placing funds into a spouse’s superannuation account.
If women become separated, they are still entitled to their share of their partner’s superannuation, through property settlement. Single women who don’t take up this right, put themselves at risk of the superannuation gap.
Government education is needed so that women are aware of, and have the ability to, exercise their rights to combat the superannuation gap. There are also other strategies that women can take to boost their superannuation, regardless of their relationship status:
- Government Co-contribution- for low income earners, the Government can contribute up to $500 for a $1,000 contributed to superannuation
- Salary Sacrifice- even small amounts per week salary sacrificed contributions will build up over time.
Women live on average four years longer than men do, meaning they carry a higher risk of running out of savings much earlier.
This is why it is important to have your estate planning, Will and Power of Attorney up to date and going to the right person. Be wary of gifting to children at the expense of your spouse and seek specialised legal and financial advice to ensure that you have your superannuation beneficiaries correctly noted.